Investing in undervalued dividend stocks is a good strategy to build long-term wealth. By holding fundamentally strong dividend stocks, you are positioned to benefit from a steady stream of dividend income and capital gains. As dividend yields are inversely related to share prices, the ongoing drawdown allows you to benefit from higher yields.
In this article, I have identified one excellent TSX stock, down 22% from its 52-week high, that you can buy right now. The stock is Brookfield Asset Management (TSX:BAM), which offers a tasty dividend yield of 3.7%.
Is the TSX dividend stock a buy right now?
Brookfield Asset Management reported solid financial results for the fourth quarter and full year 2024, demonstrating strong growth across its diversified alternative investment platform. The Toronto-headquartered company, which manages over US$1 trillion in assets, expressed optimism for accelerated fundraising and deployment in 2025.
The asset manager reported record fee-related earnings (FRE) of US$677 million, or US$0.42 per share, in the fourth quarter (Q4), up 17% year over year, bringing full-year FRE to US$2.5 billion. Distributable earnings, or DE, reached US$649 million, or US$0.40 per share, for the quarter, an 11% increase from the prior year, with annual DE totalling US$2.4 billion.
“We had a strong 2024 as both earnings and capital raising continued to gain momentum throughout the year,” said Bruce Flatt, chief executive officer of Brookfield Asset Management. The company raised over US$135 billion in capital, deployed US$48 billion, and monetized US$30 billion of investments during the year.
Fee-bearing capital grew by 18% to US$539 billion, with the credit group emerging as its most prominent business at nearly US$250 billion. Notably, Q4 saw record organic fundraising of US$29 billion across over 40 strategies.
Brookfield highlighted three secular trends driving its growth: the expected doubling of the alternative asset industry, ongoing consolidation among investment managers, and strategic alignment with major market themes, including digitalization, artificial intelligence-driven infrastructure, clean energy transition, and private credit expansion.
“These drivers position Brookfield for long-term success, and we believe we are well positioned to deliver on our long-term goal of 15% annual growth in cash flow on a per share basis,” Flatt stated.
What’s next for the TSX stock?
Looking ahead to 2025, Brookfield expects its flagship fundraising rounds to exceed previous vintages by over 15%, with two flagship funds scheduled for final close in the year’s first half. Moreover, the management anticipates US$25 billion in annual inflows from insurance channels and continued growth in the private wealth segment.
The company also completed a transaction that swapped Brookfield Corporation’s 73% private ownership in the asset management business for public shares, potentially positioning BAM for inclusion in major U.S. indices.
In line with this growth outlook, Brookfield announced a 15% increase in its quarterly dividend to an annualized rate of US$1.75 per share. Moreover, the TSX stock has increased its annual dividend from US$1.28 per share in 2022.
Analysts tracking Brookfield stock expect adjusted earnings to expand from US$1.45 per share in 2024 to US$1.98 per share in 2026. So, priced at 24 times forward earnings, BAM stock is reasonably valued and trades at a discount of 28% to consensus price targets.
