Finding undervalued dividend stocks has become increasingly difficult. After a strong rally driven by gains in energy, banking, space technology, and artificial intelligence (AI)-related companies, many of Canada’s top TSX dividend stocks are now trading near their 52-week highs.
Nonetheless, a few fundamentally strong Canadian dividend stocks have pulled back. For investors, these temporary declines can create an attractive entry point to lock in higher dividend yields and potentially benefit from meaningful capital appreciation over time.
Against this background, here is a Canadian dividend stock that has declined more than 24% from its recent high. The Canadian company is known for rewarding shareholders with steady dividend increases.
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An attractive TSX dividend stock to buy now
Canadians looking for a reliable dividend stock at an attractive valuation could consider Brookfield Asset Management (TSX: BAM). The stock is currently trading roughly 24% below its 52-week high, offering investors an opportunity to buy at a discount. While BAM stock has pulled back, it has consistently rewarded investors with higher dividend payments and currently offers a high yield of 4.1%.
Brookfield’s globally diversified portfolio helps generate resilient earnings that are less vulnerable to short-term market volatility, supporting its payouts.
Notably, a significant share of Brookfield’s income comes from fees related to long-term investment capital. As a result, nearly all of its distributable earnings are generated from these stable, fee-related revenues. In addition, more than 95% of its assets under management are backed by long-term or perpetual capital, providing strong earnings visibility and supporting the company’s financial stability.
This steady cash flow enables Brookfield to maintain a shareholder-friendly capital allocation strategy. The company returns more than 90% of its distributable earnings to shareholders through dividends. Further, it recently increased its dividend by 15%, reflecting management’s confidence and its commitment to consistently reward investors.
Why Brookfield Asset Management could deliver years of dividend growth
Brookfield Asset Management appears well-positioned to continue rewarding shareholders with higher dividend payments over the long term. Its predictable, fee-based earnings provide a solid base for consistent dividend payments and growth.
The company’s long-term outlook remains attractive. Fee-related earnings continue to grow, and Brookfield has ample capital available to invest in new opportunities. At the same time, the firm has strengthened its growth prospects by building a highly diversified platform across asset classes, investment products, clients, and geographic markets. Brookfield’s broad diversification provides multiple engines of growth, reducing reliance on any single market or business and enhancing the resilience of its overall financial performance.
The broader operating environment is also improving. Healthier capital markets, stronger fundraising activity, and a gradual rebound in mergers and acquisitions should support faster capital deployment over the next several years. As more capital is put to work, Brookfield can expand its assets under management and increase its fee-generating assets, providing an additional boost to earnings growth in the years ahead.
Overall, Brookfield Asset Management’s resilient, fee-driven business model and focus on returning cash to shareholders make it a compelling stock to buy on a pullback.
