When it comes to investing in asset management companies on the Toronto Stock Exchange, Brookfield Asset Management (TSX: BAM) is the ideal option. It is one of the largest and best financial services companies in Canada that owns and manages commercial property, infrastructure and power assets. Brookfield Asset Management offers services to global customers, but its assets are concentrated in Canada and the United States.
Here’s more on why I think Brookfield is a solid investment to make for those looking to put $1,000 to work right now.
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Strong competitive position
Brookfield Asset Management is a pure asset manager, with a number of top private equity players which can be seen as competitors. The company’s solid reputation, as well as that of its chief executive officer, are among the key selling points for long-term investors.
Additionally, Brookfield’s relative strength in the world of asset managers is worth noting. The company’s edge comes partly from its corporate structure, with a number of smaller limited partnerships included in its corporate tree. With diversified exposure to renewable energy, infrastructure and other key macro trends, investors in the parent company BAM get exposure to these key areas, along with a much lower beta overall.
This structure also notably allows the company to invest in key areas they deem fit without buying the entire stock. And while I think Brookfield Asset Management is probably the way to play these trends (because investors get so much exposure and diversification at no cost), it’s really up to the individual investor.
Strong growth and profitability
Having a diversified portfolio of assets is meaningless if these investments don’t make money. Brookfield Asset Management has stood the test of time, in part due to the ability of the company to see strong growth and profitability with its core portfolios.
Brookfield’s recent 2023 earnings report showed total revenue growth of 12% year over year to $5.5 billion. While net income did decline 4% year over year due to higher expenses over the course of the year, it’s also true that Brookfield is investing heavily in its core business lines. So, it really depends on how an investor views these bottom-line results.
Brookfield’s strong dividend yield of 3.6% provides excellent upside for dividend investors as well. Overall, I think this is a stock well positioned to continue to provide strong total returns for those with a long-term investing time horizon.
Bottom line
Brookfield will continue to invest in its core business and continues to eye growth, looking to raise more than $20 billion for its fifth flagship real estate fund. This move will help the company expand its reach globally and insulate the company from any domestic headwinds that may arise.
It’s my view that this highly diversified Canadian stock could be the ultimate TSX stock to buy now for those with a five- to 10-year time horizon.
