Brookfield is very optimistic about what’s ahead.
Brookfield Asset Management (BAM -0.61%) manages over $1 trillion in assets, making it one of the largest alternative investment managers in the world. The company is growing briskly as more investors look to diversify into alternative assets.
The company’s robust growth potential makes it one of the best financial stocks you can buy today. Here’s a look at its impressive growth profile.
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Rapidly rising fee-based income
Of Brookfield’s $1 trillion in assets under management (AUM), about $563 billion currently generates fees. Over the past year, this fee-bearing capital produced $2.7 billion in fee-related earnings. Brookfield returns most of this income to shareholders through a dividend that currently yields close to 3%.
Brookfield sees strong growth ahead for its fee-bearing assets, earnings, and dividend payments through 2029. The company expects to more than double its fee-bearing capital to $1.1 trillion by the end of the decade by putting more of the capital it has already raised from investors to work and attracting new capital. Key growth drivers include rising investor demand for alternatives, new fund launches, and expanding into new capital sources, such as insurance companies and high-net-worth investors.
As Brookfield’s fee-bearing capital grows, the company expects it to drive 17% compound annual fee-related earnings-per-share growth through the decade. Distributable earnings per share are on track to rise even faster at 18% annually, helped by the realization of carried interest (its share of the profits from funds it manages above certain return thresholds). By 2029, Brookfield estimates it will generate $2 billion in carried interest alone.
With earnings rapidly rising, Brookfield expects to grow its dividend by more than 15% per year. This combination of rising earnings and dividends positions the company to deliver strong total returns over the next five years.
Matt DiLallo has positions in Brookfield Asset Management. The Motley Fool recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.