How 4.6% Yielding Brookfield Asset Management Could Change Your Life (NYSE:BAM)

This article was co-produced with Dividend Sensei.

There’s nothing more I enjoy that celebrating the holidays with family and friends. A close second is pointing out incredible safe high-yield opportunities for our readers.

But today is extra special because I get to recommend a high-yield Super SWAN (sleep well at night) blue chip that’s not just good, it’s not just great, it can potentially change your life.

I’m talking about Brookfield Asset Management (NYSE:BAM), a new spin-off from Brookfield Corp. (BN), the global king of infrastructure and hard assets (including real estate).

Let me show you why I just bought more BAM and added it to the Dividend Kings’ ZEUS Income Growth portfolio, where I plan to invest my entire life savings.

I think you’ll agree that BAM is one of the greatest high-yield opportunities in the world and one that you don’t want to miss.

Why Brookfield Asset Management Is An Incredible High-Yield Gift

Brookfield is a Canadian company, thus, there’s a 15% tax withholding for US investors in taxable accounts. In retirement accounts like 401Ks, there’s no withholding. There’s a tax credit for US investors to recoup the withholding in taxable accounts.

Why Brookfield’s Spin-Off Is An Amazing High-Yield Christmas Gift

On Dec. 9, Brookfield Corp (BN) completed the 25% spin-off of Brookfield Asset Management (BAM).

That’s what I’m recommending today because this spin-off was designed to benefit investors in both companies and unlock value, and it will likely succeed on both counts.

For every four shares of BN investors own, they get one share of BAM, which is now 75% owned by BN.

If you don’t own BAM yet, I recommend you buy some. I’m personally buying an additional 100 shares. In fact, the new BAM is so impressive, a high-yield growth investment (possibly hyper growth), that I’m adding it to the Dividend Kings ZEUS Income Growth Portfolio.

DK ZEUS Income Growth Portfolio

Stock	Yield	Growth	Total Return	Weighting	Weighted Yield	Weighted Growth	Weighted Return
VIG	1.8%	10.2%	12.0%	8.33%	0.2%	0.9%	1.00%
SCHG	0.5%	12.5%	13.0%	8.33%	0.0%	1.0%	1.08%
SCHD	3.5%	7.6%	11.1%	16.67%	0.6%	1.3%	1.85%
EDV	4.1%	0%	4.1%	16.67%	0.7%	0.0%	0.68%
DBMF	9.0%	0%	9.0%	16.67%	1.5%	0.0%	1.50%
AMZN	0.0%	19.2%	19.2%	5.56%	0.0%	1.1%	1.07%
LOW	2.0%	20.6%	22.6%	5.56%	0.1%	1.1%	1.26%
MA	0.6%	23.2%	23.8%	5.56%	0.0%	1.3%	1.32%
BTI	7.0%	10.4%	17.4%	3.33%	0.2%	0.3%	0.58%
ENB	6.6%	4.9%	11.5%	3.33%	0.2%	0.2%	0.38%
MO	8.0%	5.0%	13.0%	3.33%	0.3%	0.2%	0.45%
HASI	4.70%	10.80%	15.50%	3.33%	0.2%	0.4%	0.52%
BAM	4.60%	14.60%	19.20%	3.33%	0.2%	0.5%	0.64%
Total	4.2%	10.7%	14.5%	100.00%	4.1%	8.2%	12.3%

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(Source: DK Research Terminal, FactSet)

Why am I adding a 3.33% allocation of BAM to ZEUS Income Growth?

ZEUS Income Growth Vs. 60/40

Metric	60/40	ZEUS Income Growth Portfolio	X Better Than 60/40
Yield	2.1%	4.1%	1.95
Growth Consensus	5.1%	8.2%	1.61
LT Consensus Total Return Potential	7.2%	12.3%	1.71
Risk-Adjusted Expected Return	5.0%	8.6%	1.71
Safe Withdrawal Rate (Risk And Inflation-Adjusted Expected Returns)	2.8%	6.3%	2.29
Conservative Time To Double (Years)	26.0	11.4	2.29

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(Source: DK Research Terminal, FactSet)

Because ZEUS Income Growth runs circles around a 60/40 with 2X the safe yield, 70% better return potential, and a 130% higher safe withdrawal rate.

ZEUS Income Growth Vs. S&P 500

Metric	S&P 500	ZEUS Income Growth Portfolio	X Better Than S&P 500
Yield	1.7%	4.1%	2.41
Growth Consensus	8.5%	8.2%	0.96
LT Consensus Total Return Potential	10.2%	12.3%	1.21
Risk-Adjusted Expected Return	7.1%	8.6%	1.21
Safe Withdrawal Rate (Risk And Inflation-Adjusted Expected Returns)	4.9%	6.3%	1.30
Conservative Time To Double (Years)	14.8	11.4	1.30

Click to enlarge

(Source: DK Research Terminal, FactSet)

ZEUS Income Growth is superior to the S&P 500 in almost every regard.

ZEUS Income Growth Vs. Nasdaq

Metric	Nasdaq	ZEUS Income Growth Portfolio	X Better Than S&P 500
Yield	0.8%	4.1%	5.13
Growth Consensus	10.9%	8.2%	0.75
LT Consensus Total Return Potential	11.7%	12.3%	1.05
Risk-Adjusted Expected Return	8.2%	8.6%	1.05
Safe Withdrawal Rate (Risk And Inflation-Adjusted Expected Returns)	5.9%	6.3%	1.07
Conservative Time To Double (Years)	12.2	11.4	1.07

Click to enlarge

(Source: DK Research Terminal, FactSet)

Are you a young investor with decades to retirement? Well, ZEUS Income Growth is still a wonderful choice.

It offers Nasdaq-like long-term returns but with 5X the safe yield and a lot less volatility.

10,000 Monte Carlo Simulations For The Next 75 Years

There’s a 99.91% statistical probability that ZEUS Income Growth outperforms a 60/40 over the next 50 years and a 93.85% chance it beats the S&P 500.

ZEUS Income Growth Bear Market Probability

Bear Market Severity	Statistical Probability Over 75 Years	1 In X Probability	Expected Every X Years	S&P More Likely To Suffer X% Decline In Any Given Year
20+%	0.79%	127	9,494	1,582
25+%	0.17%	588	44,118
30+%	0.03%	3333	250,000
35+%	0.01%	10000	750,000
40+%	0.00%	NA	NA	Infinitely More Likely

Click to enlarge

(Source: Portfolio Visualizer Premium)

The probability of ZEUS Income Growth suffering a bear market in the next 75 years is 0.79%. In any given year, it’s 1,582 less likely than the S&P 500 to suffer a bear market.

And it’s statistically never likely to suffer a 40%-plus crash.

• 60/40 suffered a 44% peak decline in the Great Recession

Why is this statistical data believable?

• ZEUS Income Growth fell less than 20% during the Great Recession vs. 44% 60/40 and 58% S&P

• the 2nd biggest stock market crash in US history didn’t result in a bear market

That’s why this ZEUS portfolio is the one I’m planning to rebalance all my life savings into when I have the financial ability (in about one or two years).

• high safe yield

• 10% historical long-term income growth

• better returns than the S&P 500, never mind a 60/40

• possibly matching or beating the Nasdaq

• 99.91% chance of success

• like riding over the biggest market potholes in a Rolls Royce portfolio

OK, so the ZEUS Income Growth portfolio sounds amazing.

• ZEUS = Zen Extraordinary Ultra SWAN (sleep well at night) portfolio

• the king of SWAN portfolios

But why am I adding BAM to it? Simply put, I’m looking for world-beater blue-chip assets that add something special to ZEUS Income Growth, and here’s why BAM fits the bill to a T.

Why I Am Buying Brookfield Asset Management And So Should You

Brookfield Corp is the parent company of the Brookfield empire, which has over $750 billion in fee-bearing assets that it believes will grow to $1 trillion within five years.

BAM was spun out to offer high-yield income investors a way to own a part of the Brookfield empire. All those fee-bearing assets? That’s under the BAM umbrella, which BN owns 75% of. BAM’s goal is to collect those fee-bearing assets and investment them just as Brookfield has been doing since 1902.

It then plans to pay out 90% of cash flows, which management estimates are $3 billion annually.

• About 75% free cash flow margins

• top 0.1% of all companies on earth

That’s because BAM has almost no costs (BN is covering its overhead) and no debt.

• BN is rated A-stable

• a 2.5% 30-year bankruptcy risk

Brookfield Corp Safety And Quality Score

Dividend Safety

Rating	Dividend Kings Safety Score (233 Point Safety Model)	Approximate Dividend Cut Risk (Average Recession)	Approximate Dividend Cut Risk In Pandemic Level Recession
1 – unsafe	0% to 20%	over 4%	16+%
2- below average	21% to 40%	over 2%	8% to 16%
3 – average	41% to 60%	2%	4% to 8%
4 – safe	61% to 80%	1%	2% to 4%
5- very safe	81% to 100%	0.5%	1% to 2%
BN	100%	0.5%	1.00%
Risk Rating	Low Risk (77th S&P Global percentile risk-management)	A- Stable Outlook credit rating = 2.5% 30-year bankruptcy risk	20% or less max risk cap

Click to enlarge

Long-Term Dependability

Company	DK Long-Term Dependability Score	Interpretation	Points
Non-Dependable Companies	36% or below	Poor Dependability	1
Low Dependability Companies	37% to 54%	Below-Average Dependability	2
S&P 500/Industry Average	55% to 63%	Average Dependability	3
Above-Average	64% to 77%	Dependable	4
Very Good	78% or higher	Very Dependable	5
BN	100%	Very Dependable	5

Click to enlarge

Overall Quality

BN	Final Score	Rating
Safety	100%	5/5 very safe
Business Model	90%	3/3 Wide Moat
Dependability	100%	5/5 very dependable
Total	99%	13/13 Ultra SWAN
Risk Rating	4/5 Low Risk
20% OR LESS Max Risk Cap Rec	5% Margin of Safety For A Potentially Good Buy

Click to enlarge

BN’s dividend track record is excellent, with an 11-year dividend growth streak and 24 years without a dividend cut.

BAM’s dividend growth score is limited to 80% safe until we have a few years to confirm management plans to grow the dividend each year, or at least not cut it (just like BN and Canadian banks do).

A 90% payout ratio is much higher than the 50% that’s generally considered safe for this industry. However, Brookfield isn’t any regular asset manager.

Companies like T. Rowe Price (TROW) and BlackRock (BLK) are highly susceptible to volatile stock prices.

But BAM’s assets under management are all private equity, including seven-year to 15-year lockups.

In fact, most of its assets are invested in “permanent fee streams,” literally the infrastructure projects it owns worldwide.

In other words, annuity-like revenue that’s more akin to a REIT than a traditional asset manager.

We have just one year of consensus dividend forecasts for BAM so far, but analysts are rather confident that BAM’s first dividend hike will be impressive.

• a 25% consensus dividend hike in 2023

• a recession year

Consensus Payout Ratios

If BAM proves itself a non-variable dividend payer that grows its dividend every year or at least doesn’t cut it in downturns (like BN has proven to be), then it will get upgraded to a low-risk 99% 13/13 Ultra SWAN quality company, just like BN.

Brookfield Asset Management Safety And Quality Score

Dividend Safety

Rating	Dividend Kings Safety Score (233 Point Safety Model)	Approximate Dividend Cut Risk (Average Recession)	Approximate Dividend Cut Risk In Pandemic Level Recession
1 – unsafe	0% to 20%	over 4%	16+%
2- below average	21% to 40%	over 2%	8% to 16%
3 – average	41% to 60%	2%	4% to 8%
4 – safe	61% to 80%	1%	2% to 4%
5- very safe	81% to 100%	0.5%	1% to 2%
BAM	80%	1.0%	2.1%
Risk Rating	Low Risk (77th S&P Global percentile risk-management)	A- Stable Outlook credit rating = 2.5% 30-year bankruptcy risk	15% or less max risk cap

Click to enlarge

Long-Term Dependability

Company	DK Long-Term Dependability Score	Interpretation	Points
Non-Dependable Companies	36% or below	Poor Dependability	1
Low Dependability Companies	37% to 54%	Below-Average Dependability	2
S&P 500/Industry Average	55% to 63%	Average Dependability	3
Above-Average	64% to 77%	Dependable	4
Very Good	78% or higher	Very Dependable	5
BAM	100%	Very Dependable	5

Click to enlarge

Overall Quality

BN	Final Score	Rating
Safety	80%	4/5 safe
Business Model	90%	3/3 wide moat
Dependability	100%	5/5 very dependable
Total	98%	12/13 Super SWAN
Risk Rating	4/5 Low Risk
20% OR LESS Max Risk Cap Rec	10% Margin of Safety For A Potentially Good Buy

Click to enlarge

But as best we can tell, BAM is a Super SWAN with a safe 4.6% yield and incredible growth potential. How good? Good enough for me to plan to invest 3.33% of my life savings into it, millions in the coming decades.

Incredible Growth Potential For 30+ Years

Management is guiding for 15% to 20% long-term cash flow and earnings growth at BAM, and here’s the initial analyst consensus.

Metric	2022 Growth Consensus	2023 Growth Consensus	2024 Growth Consensus
Sales	NA	15%	16%
Dividend	7% (Split Adjusted)	25%	NA
EPS	NA	22%	24%

Click to enlarge

(Source: FactSet Research Terminal)

In a recession year, BAM is expected to grow sales at 15% and the following year at 16%. Earnings are expected to grow at 22% to 24% in the next two years, above management’s 15% to 20% guidance.

The analyst consensus from five analysts so far is 14.6% long-term growth, which is better than Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOG) (GOOGL).

How accurate are analyst forecasts for Brookfield’s growth? Well, here are the historical margins of error for BN.

Outside of a reasonable 20% margin of error, Brookfield beats consensus earnings estimates 67% of the time over the last 20 years. It misses 8% of the time and matches expectations 25% of the time.

Smoothing for outliers, the historical margins of error are 5% to the downside and 50% to the upside.

BN’s historical growth rate has been 10% to 46% over the last 20 years.

Since the Great Recession, when alternative assets have exploded in popularity, Brookfield has grown at 19% annually.

• 10% to 22% historical-margin-of-error adjusted growth consensus range

Long-Term Consensus Return Potential

Investment Strategy	Yield	LT Consensus Growth	LT Consensus Total Return Potential
Brookfield Asset Management (Management Guidance)	4.6%	17.5%	22.1%
Brookfield Asset Management (Analyst Consensus)	4.6%	14.6%	19.2%
Nasdaq	0.8%	10.9%	11.7%
Schwab US Dividend Equity ETF	3.4%	7.6%	11.0%
Dividend Aristocrats	1.9%	8.5%	10.4%
S&P 500	1.7%	8.5%	10.2%
REITs	3.9%	6.1%	10.0%
60/40 Retirement Portfolio	2.1%	5.1%	7.2%

Click to enlarge

(Source: DK Research Terminal, FactSet, Morningstar, Ycharts)

Management is guiding for around 22% long-term returns for BAM, and analysts expect 19%. Either way, that’s Buffett-like return potential that runs circles around every popular investment strategy on Wall Street.

Inflation-Adjusted Consensus Total Return Potential: $1,000 Initial Investment

(Source: DK Research Terminal, FactSet)

If BAM can grow as management forecasts, and it has a $120 trillion growth market over the next 30 years (more on that in a moment), it could potentially go 106X adjusted for inflation.

Time Frame (Years)	Ratio Inflation-Adjusted BAM Consensus/Aristocrat Consensus	Ratio Inflation-Adjusted BAM Consensus vs. S&P consensus
5	1.48	1.50
10	2.19	2.24
15	3.24	3.34
20	4.79	5.00
25	7.09	7.48
30 (retirement time frame)	10.49	11.18
35	15.51	16.71
40	22.95	24.99
45	33.95	37.37
50	50.23	55.88
55	74.31	83.56
60	109.94	124.94
100	2522.95	3122.45

Click to enlarge

(Source: DK Research Terminal, FactSet)

That’s life-changing wealth potential while you earn a safe, generous, and rapidly-growing dividend.

And for my personal goal of eventually surpassing Andrew Carnegie’s $438.5 billion in charitable donations? Well, over 100 years, BAM’s potential to generate world-changing returns is certainly very appealing.

Historical Rolling Returns Since 1985

For 37 years, Brookfield has delivered average rolling returns of 15.6% to 20% annually.

• 19.9% rolling 12-month average returns

From bear market lows, as we’re in now, it’s generated returns as strong as:

• 110% in one year

• 65% annually for three years = 4.5X

• 51% annually for five years = 7.9X

• 47% annually for seven years = 14.8X

• 30% annually for 10 years = 13.8X

• 29% annually for 15 years = 45.6X

Brookfield is a master of hyper-growth and life-changing returns, and here’s why management thinks it can keep growing at 15% to 20% for decades to come.

Brookfield’s $120 Trillion Growth Opportunity

Bloomberg estimates that by 2050 the world needs to spend $3 to $4 trillion per year to achieve its green energy carbon goals.

That’s $90 to $120 trillion in potential infrastructure investment through 2050 alone. Meanwhile, governments are now saddled with the highest debt/GDP ratios in history, up to 260% in the case of Japan and 150% for the US.

Where is the money going to come from for all that infrastructure investment? The private sector.

Brookfield has a plan to grow intrinsic value by 17% annually over the next five years. What’s that plan based on?

Most asset managers suffered in 2022 because the global stock and bond market fell out of bed. Brookfield had a record year.

• $118 billion of asset inflows (19% growth)

• $110 billion in deployable capital

• expanded into insurance solutions

BAM oversees an empire that began in 1902 with hydroelectric investments in Brazil. It now has 180,000 operating employees running its global infrastructure empire.

In the last 20 years alone, BAM’s growth has been extraordinary.

• assets up 250X (32% CAGR)

• fee-bearing capital up 292X (33% CAGR)

• revenue up 218X (31% CAGR)

And guess how big BAM might grow over the next 30 years?

• 0.53% average expense ratio (very low for the returns it generates)

• $120 trillion investment opportunity

• assume a 10% market share

• $12 trillion in additional assets under management

• $63.6 billion in potential additional revenue by 2052

• $67.6 billion in potential revenue by 2052 (10% CAGR)

• 17X potential sales growth

Why is Brookfield the king of global infrastructure? Because it’s generated 15% to 19% annual returns for investors for 20 years.

• Cathie Wood strives for 15%-plus long-term returns and has failed spectacularly using speculative growth stocks

• Brookfield has succeeded for decades because it knows how to invest in safety and quality first and focus on stable cash flows

Add in the fact that BAM’s business model is highly leverageable, so earnings are likely to grow faster than revenue, and you can see why management’s 15% to 20% growth guidance is realistic.

• Even just 10% growth on top of a 4.6% safe yield = 14.6% long-term returns

• on par with the greatest investors in history

Brookfield is so confident in its five-year growth plan that it thinks it can increase AUM to $2 trillion and fee-bearing capital to $1 trillion, and that’s just by 2027.

For context, the largest 15 asset managers in the world have an AUM of $961 billion to $5.7 trillion today. Brookfield’s growth plan would raise its rank among global asset managers from 45th place to approximately 15th, assuming everyone else’s AUM doubles due to a bull market by 2027.

• $2 trillion today would make BAM the 5th biggest asset manager on earth

By 2027 BAM estimates its cash flow will grow from $3 billion to $9.2 billion or 25% annually.

Maybe that’s why analysts expect 25% dividend growth in 2023 and potentially far beyond.

Bottom line – Brookfield has delivered Buffett-like 19% returns for the last 20 years (actually the last 37). Management says it has a clear growth plan to deliver similar returns for the next 20 years (and possibly the next 30 or more).

And all from an empire of investment funds growing at 15%-plus.

And 90% of that cash flow will fund BAM’s attractive and safe 4.6% yield, 75% of which flows back to Brookfield Corp.

• No one has more incentive to keep the dividend safe and growing than Brookfield itself

A Wonderful Company At A Wonderful Price

Given that BAM is brand new and has no historical PE or yield to estimate its fair value, I begin by looking at Morningstar and the five analyst consensus to see what they estimate the new company to be worth.

Analyst Median 12-Month Price Target	Morningstar Fair Value Estimate
$37.18 (25.5 PE)	$34.40 (23.5 PE)
Discount To Price Target (Not A Fair Value Estimate)	Discount To Fair Value
24.66%	18.58%
Upside To Price Target (Not Including Dividend)	Upside To Fair Value (Not Including Dividend)
32.74%	22.81%
12-Month Median Total Return Price (Including Dividend)	Fair Value + 12-Month Dividend
$38.46	$35.68
Discount To Total Price Target (Not A Fair Value Estimate)	Discount To Fair Value + 12-Month Dividend
27.17%	21.50%
Upside To Price Target ( Including Dividend)	Upside To Fair Value + Dividend
37.31%	27.38%

Click to enlarge

Morningstar estimates BAM is worth 23.5X earnings, and the analyst 12-month price targets equate to 25.5X earnings.

How reasonable is that given that BAM generates “annuity-like” revenue and cash flow and has grown its assets by almost 20% in 2022, when almost all of its peers have seen AUM collapse?

Metric	Estimated Fair Value Multiple	2021	2022	2023	2024	12-Month Forward Fair Value
PE	24.50	NA	$35.77	$35.77	$44.35
Average		NA	$35.77	$35.77	$44.35	$35.77
Current Price	$28.01
Discount To Fair Value		NA	21.69%	21.69%	36.84%	21.69%
Upside To Fair Value (including dividend)		NA	27.70%	27.70%	58.32%	32.27%
2023 EPS	2024 EPS	2022 Weighted EPS	2023 Weighted EPS	12-Month Forward EPS	Historical Average Fair Value Forward PE	Current Forward PE
$1.46	$1.46	$0.00	$1.46	$1.46	24.5	19.2

Click to enlarge

I’m splitting the difference and estimating BAM is worth 24.5X earnings, the mid-range of the Morningstar and analyst consensus.

• implies a fair value yield of 3.6%

Is it reasonable for a world-beater asset manager growing at 15% to 20% long-term and 25% for the next five years (management guidance) to trade at 24.5X earnings? Yes, I think it is.

Is it reasonable to assume that income growth investors will be willing to pay 3.6% for a 15% to 20% growing asset manager with very steady cash flow and what’s likely to be steady income growth of 15% to 20% (25% in 2023 and possibly through 2027)? I certainly would be willing to accept such a yield gladly.

• It’s a higher yield than any high-yield blue-chip ETF, but with 2X to 3X the dividend growth rate

Rating	Margin Of Safety For Low Risk 12/13 Super SWAN Quality Companies	2022 Fair Value Price	2023 Fair Value Price	12-Month Forward Fair Value
Potentially Reasonable Buy	0%	$35.77	$35.77	$35.77
Potentially Good Buy	10%	$32.19	$32.19	$32.19
Potentially Strong Buy	20%	$28.62	$28.62	$28.62
Potentially Very Strong Buy	30%	$22.54	$25.04	$25.04
Potentially Ultra-Value Buy	40%	$21.46	$21.46	$21.46
Currently	$28.01	21.69%	21.69%	21.69%
Upside To Fair Value (Including Dividends)		32.27%	32.27%	32.27%

Click to enlarge

For anyone comfortable with its risk profile, BAM appears to be a potentially strong buy, with a 22% margin of safety.

Brookfield Return Potential

• 5 year return potential = 4.6% yield + 14.6% growth consensus = 19.2%

• + 5.1% valuation boost = 24.3% CAGR base-case

• 23% to 25% CAGR consensus range

BAM could 3X in the next five years, delivering 6X better returns than the S&P 500.

Risk Profile: Why Brookfield Asset Management Isn’t Right For Everyone

There are no risk-free companies, and no company is right for everyone. You have to be comfortable with the fundamental risk profile.

BAM Risk Profile Summary

• regulatory risk in the dozens of countries in which it operates (120 years of experience, the most of any asset manager)

• interest rate risk (its projects are financed with non-recourse self-amortizing debt)

• operating risk: If projects fail for any reason (such as drought hitting hydropower projects), then BAM “gives up the keys” to creditors, but cash flow for BAM would be reduced

• M&A risk: Brookfield is frequently making acquisitions to expand its offerings (like insurance service in 2022)

• currency risk: BAM operates all over the world

How do we quantify, monitor, and track such a complex risk profile? By doing what big institutions do.

Long-Term Risk Management Analysis: How Large Institutions Measure Total Risk Management

DK uses S&P Global’s global long-term risk-management ratings for our risk rating.

• S&P has spent over 20 years perfecting their risk model

• which is based on over 30 major risk categories, over 130 subcategories, and 1,000 individual metrics

• 50% of metrics are industry specific

• this risk rating has been included in every credit rating for decades

The DK risk rating is based on the global percentile of how a company’s risk management compares to 8,000 S&P-rated companies covering 90% of the world’s market cap.

BAM scores 77th Percentile On Global Long-Term Risk Management

S&P’s risk management scores factor in things like:

• supply chain management

• crisis management

• cyber-security

• privacy protection

• efficiency

• R&D efficiency

• innovation management

• labor relations

• talent retention

• worker training/skills improvement

• occupational health & safety

• customer relationship management

• business ethics

• climate strategy adaptation

• sustainable agricultural practices

• corporate governance

• brand management

BAM’s Long-Term Risk Management Is The 171st Best In The Master List 66th Percentile In The Master List)

Classification	S&P LT Risk-Management Global Percentile	Risk-Management Interpretation	Risk-Management Rating
BTI, ILMN, SIEGY, SPGI, WM, CI, CSCO, WMB, SAP, CL	100	Exceptional (Top 80 companies in the world)	Very Low Risk
Strong ESG Stocks	86	Very Good	Very Low Risk
Brookfield Asset Management	77	Good	Low Risk
Foreign Dividend Stocks	77	Good, Bordering On Very Good	Low Risk
Ultra SWANs	74	Good	Low Risk
Dividend Aristocrats	67	Above-Average (Bordering On Good)	Low Risk
Low Volatility Stocks	65	Above-Average	Low Risk
Master List average	61	Above-Average	Low Risk
Dividend Kings	60	Above-Average	Low Risk
Hyper-Growth stocks	59	Average, Bordering On Above-Average	Medium Risk
Dividend Champions	55	Average	Medium Risk
Monthly Dividend Stocks	41	Average	Medium Risk

Click to enlarge

(Source: DK Research Terminal)

BAM’s risk-management consensus is in the top 34% of the world’s best blue chips and is similar to:

• Johnson & Johnson (JNJ): Ultra SWAN dividend king

• Federal Realty Investment Trust (FRT): Ultra SWAN dividend king

• Illinois Tool Works (ITW): Ultra SWAN dividend aristocrat

• Merck (MRK): Ultra SWAN

• Texas Instruments (TXN): Ultra SWAN

• McDonald’s (MCD): Super SWAN dividend aristocrat

The bottom line is that all companies have risks, and BAM is good at managing theirs, according to S&P.

How We Monitor BAM’s Risk Profile

• five analysts

• two credit rating agencies

• seven experts who collectively know this business better than anyone other than management

“When the facts change, I change my mind. What do you do, sir?”

– John Maynard Keynes

There are no sacred cows at iREIT or Dividend Kings. Wherever the fundamentals lead, we always follow. That’s the essence of disciplined financial science, the math behind retiring rich and staying rich in retirement.

Bottom Line: Buy 4.6% Yielding Brookfield Asset Management Today And Potentially Earn Buffett-Like Returns For 20 to 30 Years…Or Longer

Let me be clear: I’m NOT calling the bottom in BAM (I’m not a market-timer).

Super SWAN quality does NOT mean “can’t fall hard and fast in a bear market.”

Fundamentals are all that determine safety and quality, and my recommendations.

• over 30+ years, 97% of stock returns are a function of pure fundamentals, not luck

• in the short term; luck is 25X as powerful as fundamentals

• in the long term, fundamentals are 33X as powerful as luck

While I can’t predict the market in the short term, here’s what I can tell you about BAM.

• one of the highest quality high-yield blue-chips on earth

• top 8% quality among the world’s best companies

• safe 4.6% yield (almost 3X the S&P yield growing 25% per year)

• 19.2% annual long-term total consensus better than the S&P, aristocrats, SCHD, and Nasdaq

• potentially 22% undervalued

• 19.2 PE, with 25% cash flow growth guidance through 2027

• 3X consensus return potential over the next five years, 6X more than the S&P 500

Brookfield Asset Management was always an incredible dividend growth blue-chip. But its yield was paltry.

Now BAM’s yield is amazing and you can benefit from the world’s best infrastructure managers, who have delivered Buffett-like 20% returns for nearly four decades.

Most impressively, that life-changing return potential, along with an ocean of safe dividends, could last for decades to come.

There are many wonderful high-yield blue-chip bargains you can buy this Christmas, but few offer the incredible combination of safe yield today and potential life and even world-changing wealth in the future.

From everyone at Dividend Kings and iREIT, I want to wish you and yours a safe, healthy, and joyous holiday season:)

Author’s note: Brad Thomas is a Wall Street writer, which means he’s not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: Written and distributed only to assist in research while providing a forum for second-level thinking.