Investing wisely can significantly shape your financial future. Other than investing domestically, Canadian investors should also gain international exposure. Here are two of the smartest dividend stocks Canadian investors can consider buying now. Both Brookfield Asset Management (TSX:BAM) and Visa (NYSE:V) are set up to benefit from international growth.
Brookfield Asset Management
Brookfield Asset Management is positioned for exceptional growth, attracting significant investments due to its impressive track record and diverse portfolio. With expertise across various sectors, including infrastructure, renewable energy, real estate, private equity, and credit, BAM consistently generates substantial cash flows. This financial stability supports its commitment to delivering solid long-term returns to shareholders.
As one of the leading global asset managers, Brookfield Asset Management oversees approximately US$1 trillion in assets. This scale allows the firm to benefit from increasing fee-related earnings. Over the past five years, it has demonstrated remarkable growth, with a compound annual growth rate (CAGR) of over 10% in fee-bearing capital, translating into an impressive CAGR of more than 13% in fee-related earnings. This robust performance instills confidence that BAM can sustain a double-digit dividend growth rate.
Currently, the stock offers a dividend yield of around 3%, which is decent given its strong growth profile. Since BAM was spun off from its parent company in December 2022, it has little trading history. As it establishes its presence in the market over time, investors would be able to use its dividend yield as a gauge for its valuation. In a landscape where quality dividends are increasingly sought after, Brookfield Asset Management is a promising choice for long-term investors, especially when bought during market corrections.
Visa
Visa has long been a global leader in digital payments, and its recent performance provides a good entry point for investors. Over the past year, Visa stock has returned approximately 18%, compared to the broader U.S. stock market’s 36%. While this might be disappointing, the recent weakness presents a strategic opportunity to invest in a high-quality company at a more attractive valuation.
In line with Warren Buffett’s investment philosophy, Visa is a perfect example for the idea of purchasing a “wonderful company at a fair price.” Recently, Visa announced a strategic partnership with Analytic Partners, enhancing its offerings by combining Visa’s extensive merchant relationships with advanced analytics capabilities. This collaboration aims to optimize marketing spend for brands and merchants globally, further solidifying Visa’s position in the digital payments landscape.
Although Visa’s dividend yield stands at a modest 0.7%, the company has demonstrated a remarkable ability to grow its dividends over time. In the past decade, Visa’s per-share sales surged by 13.5%, with operating income increasing by 14.1%, diluted earnings rising by 16%, and dividends growing at an impressive 18.2% CAGR.
Visa’s dividends are sustainable, representing only about 22% of diluted earnings. With a forecasted total return of around 12-13% CAGR over the next three to five years, Visa is a solid investment for those looking to capitalize on the global shift toward digital payment transactions.
Making the most of your $3,000 investment
If you have $3,000 to invest, consider splitting your funds equally between Brookfield Asset Management and Visa. This strategy not only diversifies your portfolio but also positions you to benefit from the growth potential of both companies. As they continue to thrive in their respective markets, you can expect not only dividends but also capital appreciation.
Investing in quality dividend stocks is a smart way to build wealth over time. Both Brookfield and Visa offer compelling reasons to be a part-owner of their businesses, ensuring your $3,000 works hard for you in the years to come. That said, investors should be ready for volatility and to potentially buy more shares on market downturns.
