When it comes to investing in dividend stocks, savvier investors ignore high-yielding dividends and look beyond them. Instead, they seek companies that have track records of reliably paying and growing distributions for years. The dividend growth history matters more than yields alone because it provides valuable proof that a company has the ability and commitment to reward shareholders.
A well-balanced portfolio consists of such high-quality stocks, but that does not mean every equity security in your portfolio should have a long track record. One relatively young dividend stock on the TSX that has been increasing its payout of late is Brookfield Asset Management (TSX:BAM), which only began its streak in 2023.
While it has a nascent dividend history, investors seeking long-term passive income should pay attention to it. In the last three years, BAM has increased its dividend at a compound annual growth rate of around 16%, which is an impressive figure for a company offering an already attractive dividend yield. Here’s a closer look.
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Brookfield Asset Management
Brookfield Asset Management is a global alternative asset manager, boasting a history of over 25 years of investing in assets essential to the global economy. BAM has investments spanning virtually every industry, from real estate and credit to private equity, energy, infrastructure, and more. What makes BAM particularly appealing in terms of dividends is its recurring revenue.
The company generates fee-based revenue that is backed by long-duration capital and diversified investment strategies. The more capital it raises, the more it expands the assets under its management. As a result, it has the ability to increase its fee-based earnings without taking unnecessary risks.
The rapid adoption of innovative technologies in the world today requires massive investment. When global trends point toward a new area for growth, firms like BAM are there with the capital necessary to invest. In turn, it can create an even longer runway for substantial growth in the years to come.
What about the dividends?
BAM has not been shy about its ambitions with dividends. The company’s management targets long-term dividend growth of at least 15% while maintaining an up to 95% payout ratio from distributable earnings. In the last 12 months, in the June 2026-ending year, the fee-related earnings from the firm increased by almost a fifth from the same period last year, and distributable earnings increased by 12%. During this period, BAM increased its assets under management to around US$1.3 trillion.
Foolish takeaway
I like BAM because it boasts an above-average dividend yield. As of this writing, it trades for $75.93 per share, and it pays US$0.50 per share each quarter, translating to a roughly 3.8% dividend yield. Combined with the potential for further dividend growth.
That said, the short dividend history is still a factor to consider before deciding how much to invest in its shares. We do not yet know how the stock will perform in terms of dividend distribution and growth across several market cycles. For that reason, there is still some risk involved with investing in BAM stock.
My advice would be to invest but with some caution.
