Is Brookfield Asset Management Stock a Millionaire Maker?

Brookfield Asset Management (BAM -0.69%) increased its dividend 15% earlier this year. That’s a big number, and one that investors might think is a one-time event. But if management lives up to its own goals, it will just be one of many dividend hikes. Here’s why dividend growth investors will probably want to consider buying Brookfield Asset Management as they look to build a million-dollar portfolio.

What does Brookfield Asset Management do?

As its name makes very clear, Brookfield Asset Management is an asset manager. That means that it takes money from customers and invests on their behalf. It charges fees for this service.

The key number to watch here is assets under management (AUM), which basically tells you how much money customers have entrusted to the company.

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Brookfield Asset Management’s specialty has long been infrastructure. For more than 100 years it has bought, operated, and sold large physical assets on a global scale. The mix of assets is wide, including things like hydroelectric dams, toll roads, apartment buildings, and, more recently, digital infrastructure like cell towers and data centers. It has also branched out into other areas, however, buying its way into offering credit investment services.

All in, Brookfield Asset Management is offering a broad collection of alternative investments. This is a growing segment of the asset management sector. And given the company’s history of success and well-regarded name, it seems likely that it will do well in the future. It currently has AUM of about $1 trillion.

Watch the dividend to see if management is succeeding

To be fair, AUM isn’t exactly the right metric for Brookfield Asset Management because it manages money for itself and for others. It also has a collection of publicly traded businesses that it oversees. So the company also provides a figure it calls fee-bearing capital. Both numbers are important, but fee-bearing capital is the one that’s going to be the real growth driver for the business.

The plan is to double the size of the fee-bearing capital Brookfield Asset Management oversees during the next five years. Right now, fee-bearing capital sits at about $500 billion. The plan is to increase that to more than $1 trillion by 2030. Management expects to drastically expand every individual line of business it offers as it does this.

This is where the hefty 15% dividend increase comes into the story. If management succeeds in its growth plans, it believes it can sustain 15%, or higher, dividend increases through to the end of the decade. That makes this not just a growth stock, but a dividend growth stock as well.

Now add in the dividend yield, which is currently an attractive 2.9%, and the story gets even better. That yield is more than twice that of the S&P 500 (^GSPC -0.39%). So it is a relatively high-yield dividend growth stock as well.

There are always risks, but Brookfield Asset Management is compelling

Managing money for others isn’t an easy job. And market gyrations can quickly change the fee-bearing assets Brookfield Asset Management has at its disposal. There are very clear risks to owning a company like this that is so tied to the stock market. However, given Brookfield Asset Management’s long and successful history, it seems likely that it could help make some millionaires if they stick with it for the long term to benefit from the planned growth of the business — and those 15% annual dividend increases management is talking about.