Are you looking for a quality Canadian compounder stock that you can rely on to keep delivering alpha year in and year out?
If so, you need look no further than Brookfield Corp (TSX:BN).
Brookfield is a Canadian financial conglomerate, well known for its asset management business, Brookfield Asset Management (TSX:BAM), and partnerships such as Brookfield Renewable Partners.
Brookfield Corp has a long and illustrious history that ultimately dates back to the 1800s. The company today is one of the largest in Canada, ranking fourth by market cap. If all of Brookfield’s controlled entities were counted, it would have a much higher market cap than that — though many of the entities Brookfield controls are owned by the investing public.
In this article, I’ll share five reasons why you want some Brookfield stock in your portfolio.
High growth
One thing that Brookfield has going for it, especially compared to other financial services companies, is high growth. In the last 12 months, the company’s net income grew about 10%, and its distributable earnings (DE) before realizations increased 18%. In the same period, DE with realizations (i.e., asset sales) grew 0.8%. Management encourages shareholders to evaluate Brookfield’s performance by DE before realizations, as that measure doesn’t include one-offs like asset sales. Based on the preferred measure, Brookfield is growing quite a bit.
Lots of deployable capital
Another thing that Brookfield — especially Brookfield Asset Management — has going for it is a lot of deployable capital. In its most recent earnings release, Brookfield announced that it had $178 billion worth of deployable capital company-wide. That is a significant amount of capital that could drive billions per year in fees. If Brookfield charges 1% on client capital per year on average, we’re talking $1.78 billion worth of new annual fees here.
Many intriguing deals
Another reason to hold Brookfield is the fact that the company has been closing many intriguing deals lately. Just last year, Brookfield Renewable announced that it would supply 10.5 gigawatts of power to Microsoft. After that, the company announced a similar deal with Alphabet, parent of Google and YouTube. There are a lot of exciting things happening here, and with Brookfield’s executives being some of the best-connected in the world, who knows where the limit is.
Quality leadership
Still, one more thing Brookfield has going for it is great management. I wouldn’t be exaggerating if I said that Brookfield is one of the best-run companies in the world. CEO Bruce Flatt is an accountant with a value investing philosophy and a 16% compound annual growth rate track record. Conor Teskey has also presided over great things at Brookfield Asset Management. I could go on and on.
A sales advantage
Last but not least, Brookfield and its funds have a major advantage when it comes to selling investments to high-net-worth investors. The company’s executives are extremely well-connected, personally knowing big tech CEOs, the rulers of Qatar, President Donald Trump, and many more. Just recently, Bruce Flatt was in the U.S. talking to Trump about a potential $80 billion investment in U.S. nuclear power plants. That’s the kind of deal you can do when you hobnob with the rich and powerful.
Foolish bottom line
Brookfield stock has basically everything you could want in a long-term hold. High growth, consistent opportunities to invest at high rates of return, competent management, and more. Those buying Brookfield today should be rewarded in the long term
