Why I Think Every Investor Should Consider Brookfield Asset Management Inc.

Because Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM) is so efficient at growing investors’ money, I believe this stock is a no-brainer investment.

| More on:
The Motley Fool

There are plenty of great companies available for investors to invest in. But there are few companies that I can comfortably say that every investor should consider owning. The one company that I genuinely believe is a can’t-miss stock is Brookfield Asset Management Inc. (TSX:BAM.A)(NYSE:BAM).

The business model of Brookfield is rather straight forward. It takes money from limited partners–which are different from common stock investors–and invests it for them in a wide range of assets and geographies. It buys infrastructure, real estate, and energy projects and invests in private equity. All told, the company has its hands in multiple pots. Brookfield makes money by taking a decent cut of the profits that it generates from its limited partners.

But that’s what a lot of hedge funds and private equity funds do. The difference is that Brookfield is one of the best in the business. Its ability to identify assets that are undervalued has made the company incredibly successful. And we’re not talking about small assets here. The company has a war chest of $10 billion that it is looking to deploy, so it is always looking to make a large deal.

For example, it currently has an offer on the table to purchase Asciano, Ltd. for US$6.6 billion. This is an Australian port company–the exact type of asset that Brookfield likes to buy. When economies are strong, ports are great businesses, and that’s what Brookfield is banking on. Right now, it is competing with another consortium of investors looking to buy it, but I wouldn’t be surprised if Brookfield increased its bid to seal the deal.

Another example of its ability to deploy assets is in Brazil. Brazil’s credit rating dropped due to economic concerns. This makes it more expensive for businesses to get loans, putting them on track to go out of business. Brookfield has set aside $1.2 billion to buy up entire infrastructure projects for pennies on the dollar. When the country’s economy gets strong again, those assets will be worth much more, making Brookfield and its investors a lot of money.

Investors should buy Brookfield

In my opinion, buying this stock is a no-brainer. It has consistently rewarded investors with high growth and a dividend. If you had invested $10,000 in the company 20 years ago, that investment would be worth $320,000 today. On average, the company has grown by 19%.

Brookfield also pays a small, but consistent dividend of $0.16/share. This averages out to a yield of 1.38%.

The reality is that this is a company that knows how to take money, deploy it, and turn it into considerable profit. Investors that buy this stock should expect to see continued growth as that $10 billion war chest is used to acquire assets.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jacob Donnelly has no position in any stocks mentioned. The Motley Fool owns shares of BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.

More on Investing

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »