Should You Buy Brookfield Asset Management While It's Below $55?

Like many stocks, Brookfield Asset Management (NYSE: BAM) has slumped this year. Shares of the leading global alternative asset manager were recently below $55 a piece, down more than 15% from their high earlier this year.

Here's a look at whether the dip is a buying opportunity or if investors should wait for the stock to fall even further.

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On track for another strong year

Brookfield Asset Management is coming off an excellent year. It generated nearly $2.5 billion in fee-related earnings last year, a more than 10% increase from 2023. Its growth rate accelerated during the year as the company raised capital from investors and deployed it into fee-bearing investments. Brookfield raised $135 billion from investors last year, including a record $29 billion in the fourth quarter. That helped drive an 18% increase in fee-bearing capital during the fourth quarter and a 17% uptick in fee-related earnings in that period.

That gave it a lot of momentum heading into 2025. President Connor Teskey stated in the fourth-quarter earnings press release that "2025 is shaping up to be yet another record year for us." Brookfield has continued to grow its investment platforms this year. It recently closed its inaugural infrastructure structured solutions fund, achieving its $1 billion target. The company also entered into a strategic partnership with Angel Oak, acquiring a majority stake in that business to expand its credit business.

These and other growth drivers enabled Brookfield to hike its dividend by 15%. With its share price falling and dividend payment rising, it has a dividend yield of nearly 3.5% at the current sub-$55 share price. That's more than double the S&P 500's dividend yield (less than 1.5%).

Meaningful growth ahead

Brookfield's progress over the past year has put it in a strong position to continue growing briskly. The company ended last year with $539 billion of fee-bearing capital. It plans to increase its fee-bearing assets under management (AUM) to around $1.1 trillion by 2029 as it expands its various investment platforms.

That growing fee-bearing capital will increase the company's fee-related income and distributable earnings. Brookfield sees its fee-related earnings rising at a 17% compound annual rate through the end of the decade, more than doubling the total to $5 billion. Meanwhile, it expects distributable earnings (DE) to grow at an 18% compound annual rate, increasing from almost $2.4 billion last year to $5.1 billion in 2029. It plans to pay most of its distributable earnings to investors in dividends (95% payout ratio).

That puts it on track to grow its dividend at a 15% annual rate over the next several years. Given its already higher dividend yield, Brookfield will provide investors with an increasingly lucrative stream of dividend income in the coming years.

With its business on track to more than double its earnings over the next five years, Brookfield's stock has significant upside potential. While the stock isn't a screaming value right now (it trades at about 35 times its 2024 DE), it's on track to more than grow into its valuation over the next several years (it trades at about 18 times its 2029 DE). In addition to the upside in its stock price, Brookfield offers a lucrative and rapidly growing stream of dividend income, adding to its total return potential.

A great time to buy

The recent dip in Brookfield Asset Management's stock below $55 a share looks like a great buying opportunity. The leading global alternative asset manager now offers a higher dividend yield and a lower valuation. That puts investors in an even better position to earn a strong total return in the coming years as the company grows its earnings and dividend at the expected 15%+ annual rate. It can potentially deliver total returns at around that same annualized level.

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Matt DiLallo has positions in Brookfield Asset Management. The Motley Fool has positions in and recommends Brookfield Asset Management. The Motley Fool has a disclosure policy.