Stock and Dividend Analysis: Brookfield Asset Management

There are few companies in Canada that have generated more wealth for its investors than Brookfield.

The company can trace its history all the way back to 1954 when Peter Bronfman — of Seagram’s fame — created an investment company with the forced sale of his shares. He and his brother Edgar were pushed out by the Montreal members of the family, and the two branches of the family tree went their separate ways.

To honour Peter, Brookfield continues to abide by the guiding principles he wrote so many years ago. They call these rules Peter’s Principles, and they’re good general business rules.

I decided to honour Peter in a different way — by getting absolutely loaded before I wrote this. Sorry about the typos!

A decade later, still under Peter’s leadership, the company decided to focus on real assets, and to this day Brookfield is the owner of things like power companies, infrastructure assets, and real estate.

That meshes pretty well with our philosophy around here. Remember, us here at Canadian Dividend Investing (me and my cat, Lenny) are looking for:

• Boring companies

• In industries that we understand

• That pay steady, preferably rising dividends

• With conservative balance sheets

• Which are temporarily cheap

Although we don’t place a total emphasis on real assets like Brookfield does, my portfolio is still stuffed with those kinds of stocks. The fact is that I understand those types of businesses better than the alternatives, they mesh nicely with the get rich slowly attitude we have around here, and they’re much more likely to pay dividends back to their owners.

Brookfield slowly grew in the Canadian market and by the 1980s became a dominant player with large positions in dozens of Canadian businesses. It then pivoted to the United States and around the world in the 1990s, including acquiring a large real estate portfolio from distressed developer Olympia & York in 1996. It still owns these marquee properties today, which include important locations in places like Manhattan.

The company then expanded into renewable power, infrastructure, and other real assets. It spun off stakes in these industries into publicly-traded subsidiaries. Brookfield Renewable Partners (TSX:BEP.un)(TSX:BEPC) emerged as a standalone entity, along with Brookfield Infrastructure Partners (TSX:BIP.un)(TSX:BIPC). The parent maintained a majority ownership stake in each spinout, with these companies paying out most of their earnings as dividends to their owners. The parent would also collect fees to manage the assets.

Then, in 2023, Brookfield did another spinout. It created a pure play asset manager, separating it from the holding company. Brookfield Asset Management (TSX:BAM) emerged, with Brookfield continuing to hold a 75% interest in the company. The new entity had a number of different advantages than the parent, including:

• An asset-lite company that wasn’t encumbered with a bunch of unloved real assets

  • Remember, Brookfield Corporation still owns office towers after taking its REIT, Brookfield Property Partners, private in 2021

• Strong growth as institutional cash pours into various Brookfield funds

• The promise of a succulent dividend

  • Along with excellent potential dividend growth

• Much stronger ROE and ROIC versus other Brookfield entities

• A terrific balance sheet with virtually zero debt

• The backing of the parent company, which is then backed by tons of insider ownership

At this point, investors have about a half dozen different ways to invest in the various Brookfield subsidiaries. Each one has its pros and cons. Which one should y’all choose?

Here’s the case for choosing BAM, which might be my favourite of the whole lot.

The skinny

Brookfield Asset Management doesn’t just manage cash for Brookfield. It also manages cash for many of North America’s largest pension funds, institutional investors, and other asset managers.

Brookfield has carved out a unique position among asset managers by actually delivering excellent returns for clients. It has the scale to deal with the largest clients and has operations around the world — which helps it identify deals in far-flung lands. As mentioned, it also focuses on real assets, which its investors tend to appreciate. There’s no speculating on the Next. Big. Thing; Brookfield’s managers focus on things that have worked for decades.

Brookfield has earned its position as one of the world’s largest asset managers by creating an ecosystem that connects large investors with the types of investments needed to reach their goals. In many cases it has multi-decade relationships with these investors, and it also has permanent capital in vehicles such as BEP and BIP, among others. These factors combine to give us pretty good insight into growth in assets under management (AUM).

“But Nelson, I’ve heard that ETFs are the ticket. Why wouldn’t BAM’s clients just invest in them and hit the beach?”

There are a few reasons. One is that the underlying institutional fund managers who shepherd this capital want to make it look like they’re doing something to justify their jobs. Another is it’s just easier to gain access to some of these sectors by handing their cash over to Brookfield, rather than building it in house. Passive solutions don’t really exist in sectors like private equity, either. And the fact is that BAM’s clients do invest in ETFs, but BAM provides them the ability to put large amounts of capital to work in alternative sectors that aren’t easily replicated by ETFs.

Finally — and this is by far the most important — BAM has put up terrific returns for long periods of time. Which is bound to attract some interest.

One misconception folks have about this business is fund flows are subject to the whims of the market. There are many competitors out there, the logic goes, and dollars end up going to the hot hand. Retail investors do it by crowding into the sector du jour, so why wouldn’t professionals do something similar?

But that just isn’t true. There are few firms that can offer what Brookfield does, which includes the ability to scale, worldwide exposure, and the history of excellent returns. Plus, large institutional investors tend to have money pouring in on a consistent basis, and need to make plans on where to put it in advance. This creates a world where growth is steady and fairly predictable.

BAM hasn’t been a publicly traded company for long, but growth has been impressive. Revenues grew from US$4B in 2024 to US$4.8B in 2025. Analysts expect the top line to surpass US$6B this year and peak at just under $8B in 2028 — meaning the top line is expected to effectively double between 2024 and 2028.

BAM isn’t quite that aggressive, but it does tell investors that its business is expected to double by 2030.

And that’s after a 15% CAGR in fee-related earnings (and fee-bearing capital) from 2020-25. So growth targets aren’t just being plucked out of thin air. They’re based on the last five years’ growth.

The future looks pretty rosy, the business is nicely profitable, the company has 20%+ returns on both equity and invested capital, and the balance sheet is terrific. Net debt is under 0.5x EBITDA. There’s a lot to like here.

Yet shares have fallen by 10% over the last year, and the stock is currently flirting with a 52-week low. This is during a period when the TSX is up nicely, too. So what gives? Why are shares struggling?

The opportunity

BAM shares are struggling today for a few different reasons.

The first is investors have turned bearish on private equity. A combination of limited liquidity, higher interest rates, a tepid overall economy, and a glut of unsold properties has caused a slump in the sector. Investors are speculating that this leads to decreased earnings for asset managers in the space — like Brookfield.

This also explains why Brookfield Asset Management shares have underperformed Brookfield Corporation shares so substantially over the last six months or so. The former is viewed as a much bigger bet on private equity.

We’ll note that much of BAM’s management fees come from permanent assets, which puts it in a better spot than competitors who are subject to investors pulling money out or not putting new money in.

I’m also going to argue that BAM shares simply got expensive. At their peak of close to $90 each on the TSX, shares sold for nearly 40x forward earnings expectations. The valuation is closer to 20x forward earnings today, which is close to BAM’s lowest valuation as a standalone public company.

Finally, we’ll note that many of BAM’s detractors don’t love the accounting the company uses. For instance, BAM reports distributable earnings as its main earnings metric, a number that includes profits from investments that have been sold. Bears don’t think such a number accurately reflects true earnings.

Additionally, these bears are quick to point out that if the private equity market continues to be soft then BAM won’t have an avenue to sell investments — since nobody is buying. This restricts its ability to profit from investments, which would obviously impact distributable earnings.

Dividend growth

Normally we analyze both buybacks and dividend growth in this section, but BAM doesn’t have any history of buybacks in its short period as an independent company. So we’ll go straight to dividends.

Dividend growth has so far been excellent. The payout started out at US$1.28 per share in 2023 and grew in both 2024 and 2025.

The latest dividend increase — which was just announced last month — was a 15% increase to US$0.5025 per share on a quarterly basis, or US$2.01 per share annually. That works out to a 57% increase since 2023, which is one of the best dividend growth records in North America during that time.

BAM has pledged to pay out most of its earnings as dividends, which means that investors should be able to count on dividend growth that largely matches earnings growth. EPS growth is expected to be around 15% annually for the next five years (as per BAM’s own guidance), which means dividend growth should be about the same.

As it stands today, BAM’s dividend yield is a robust 4.7%. Combine that with the expected growth rate, and it works out to something pretty special. There are very few companies that can offer both.

Will BAM disappoint on the growth side of the equation? Maybe! The share price is indicating that various folks think that might happen. But this is a company that has been so good for so long that I’d be willing to give it the benefit of the doubt.

Dividend safety: Medium
Dividend growth potential: 10%+

(Note: I gave BAM a medium rank in dividend safety because they’ve been clear on one thing. Dividends will track earnings. If the bottom line disappoints, I’d expect a temporary dividend cut. Long-term I still expect growth, but short-term anything could happen.)

The bottom line

The entire Brookfield group has a terrific reputation among Canadian investors, and I can see why. The various entities have done a nice job growing investor wealth and most have paid generous dividends over multiple decades. The combination of capital gains and dividend growth is exactly what so many of you are looking for, me included.

I view today as a terrific opportunity to pick up shares at a reasonable valuation. Will this be the bottom? I have no idea. But I’m happy to pay about 20x earnings for a company that looks poised to grow the bottom line by 15%, plus it has the ability increase the dividend by approximately the same amount.

This is one of those businesses that can — and should — grow without having to put large amounts of capital to work. I believe that is worth a premium valuation.

I’ve been buying BAM for my portfolio of late, and will continue to add in the low-to-mid $60 range. I think Nelson five years from now will be pretty happy with current Nelson’s decision.