Brookfield (TSX: BN) and Power Corporation of Canada (TSX: POW) are two of the most prominent names on the TSX. Both are known for diversified business models and steady performance. While Brookfield is a global asset management giant with investments across infrastructure, real estate, and renewable energy, Power Corporation leans more toward financial services, wealth management, and insurance. Both companies offer unique advantages, but depending on your investment goals, one might be a better buy right now.
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Into earnings
Brookfield’s recent earnings painted a picture of strength and resilience. The top stock reported distributable earnings before realizations of $4.9 billion, or $3.07 per share, representing a 15% increase from the previous year. This strong performance was driven primarily by growth in its asset management business, where fee-related earnings grew by 14%. Brookfield’s fee-bearing capital now stands at an impressive $539 billion, reflecting a 23% increase year over year. The company’s wealth solutions division also stood out, with distributable operating earnings nearly doubling to $1.4 billion, largely due to strategic acquisitions and strong annuity sales. In light of these results, Brookfield announced a 13% increase in its quarterly dividend, demonstrating confidence in its ability to generate consistent cash flow.
Power Corporation’s third-quarter results for 2024 were a bit more mixed, though still solid. The top stock reported net earnings of $239.2 million, up from $209.8 million in the same quarter last year. However, adjusted net earnings came in at $542 million, a decline from the $1 billion reported in the third quarter (Q3) of 2023. That said, the top stock’s net asset value per share saw a healthy 15% increase, reaching $57.92 by the end of the quarter. This growth was largely driven by strong performances from subsidiaries — ones that posted a 12% increase in earnings per share year over year.
Returns and income
From a dividend perspective, Power Corporation offers a more enticing yield. Its forward annual dividend is set at $2.25 per share, translating to a yield of about 4.71%. This level of return is particularly appealing for income-focused investors who value stability and consistent payouts. Power has a long track record of maintaining and occasionally increasing its dividend, supported by its diversified portfolio of financial services and investment holdings. In contrast, Brookfield’s forward annual dividend yield sits at a more modest 0.61%. However, the recent 13% increase in its quarterly payout suggests that the top stock is committed to enhancing shareholder returns as its earnings grow.
In terms of market performance, Brookfield’s stock is currently trading at $82.06, having climbed significantly from its 52-week low of $52.77. The top stock’s market capitalization now stands at $126.29 billion, reflecting investor confidence in its long-term prospects. Power Corporation, meanwhile, trades at $48.08, with a market cap of $30.55 billion. While its share price has been less volatile than Brookfield’s, it has steadily appreciated from its 52-week low of $35.83.
Future outlook
Looking ahead, Brookfield appears to have stronger growth prospects. The top stock’s forward price-to-earnings (P/E) ratio is 15.85, suggesting that investors are willing to pay a premium for its expected earnings growth. Brookfield’s global reach, combined with its investments in renewable energy, infrastructure, and private equity, positions it well to benefit from macroeconomic trends such as urbanization and the transition to clean energy.
Power Corporation, with a forward P/E ratio of 9.06, appears more attractively valued relative to its earnings potential. The top stock’s core businesses continue to perform well. And its focus on wealth management and insurance provides a stable revenue base. However, Power’s growth is likely to be more moderate compared to Brookfield’s, as its business model is more defensive and less exposed to high-growth sectors like renewable energy and private equity.
Bottom line
Ultimately, the choice between Brookfield and Power Corporation depends on your investment priorities. If you’re looking for growth and are comfortable with a lower dividend yield, Brookfield’s global diversification and expanding asset management business make it an attractive option. But if you prefer income stability and a higher dividend yield, Power Corporation offers solid returns with less exposure to market volatility. Both top stocks are well-established and financially sound. Yet, understanding your investment goals will help you determine which stock fits better in your portfolio.
