Leo Sun, The Motley Fool
5 min read
In This Article:
-
Brookfield Asset Management's stock has soared since its debut in 2022.
-
The company is impressing investors with its robust growth in a rough market.
-
But its stock looks a bit pricey, and its dividend yield won't turn any heads.
Brookfield Asset Management (NYSE: BAM), one of the top alternative asset management firms in the world, went public in 1983. But in December 2022, it rebranded itself as Brookfield Corp. (NYSE: BN) and spun off its core asset management business as the "new" Brookfield Asset Management.
Brookfield Corp. now serves as the parent company of Brookfield Asset Management, which it holds alongside its other investments. The new Brookfield Asset Management became a pure asset manager, which earns management fees through its investment funds.
Brookfield Asset Management's stock has risen in price nearly 50% since its spinoff listing in 2022. Should investors still buy it as a safe-haven play in this turbulent market?
Instead of investing in traditional assets like stocks, bonds, and Treasury bills, Brookfield Asset Management gives its investors exposure to "alternative" assets in the real estate, infrastructure, private equity, and credit markets.
As an asset management firm, Brookfield gauges its growth with three key performance metrics: its fee-bearing capital (FBC), or its total managed capital from its clients; its fee-related earnings (FRE), or its total earnings from its management and advisory fees; and its distributable earnings (DE), or its available cash flow for covering its dividends and interest payments. All three of those metrics grew at healthy rates over the past three years.
|
Metric |
2022 |
2023 |
2024 |
|---|---|---|---|
|
FBC |
$418 billion |
$457 billion |
$539 billion |
|
FBC growth (YOY) |
15% |
9% |
18% |
|
FRE |
$2.11 billion |
$2.24 billion |
$2.46 billion |
|
FRE growth (YOY) |
15% |
6% |
10% |
|
DE |
$2.10 billion |
$2.24 billion |
$2.36 billion |
|
DE growth (YOY) |
11% |
7% |
5% |
Data source: Brookfield Asset Management. YOY = Year over year.
Brookfield's robust growth was mainly driven by institutional investors, many of whom rotated from traditional assets toward alternative ones as rising interest rates, inflation, geopolitical conflicts, and other macro headwinds rattled the stock and bond markets. Many of Brookfield's funds also lock in their investors for more than 10 years, so it's well insulated from the near-term headwinds.
