The stock market continues to fluctuate above and below the $21,000 mark on the TSX today. So, it’s no wonder that investors continue to look for easy ways to create even more easy income. This would include Guaranteed Investment Certificates (GIC) for fixed income, but it also includes dividend stocks.
So, it’s no wonder that investors are also looking at companies that are increasing their dividends lately. And that would include this passive income all-star, which recently increased its dividend by an incredible 19%.
What stock is it?
Don’t worry; I won’t lead you on any longer. Brookfield Asset Management (TSX:BAM) recently reported earnings, and amidst the earnings came a 19% increase in the annual dividend. Yet, if investors thought this alone would send shares upward, think again.
The Canadian asset manager reported a profit of US$374 million during its recent earnings report, seeing profit drop from US$504 million the year before. Even so, it was able to raise its quarterly dividend to US$0.38 per share.
Even so, BAM stock doesn’t think the drop will last much longer. With interest rate cuts on the way, the asset manager believes there will be a lot more deal activity in the next year — both from the manager and the companies it oversees.
An “environment for investing”
In an earnings call, Chief Executive Officer Bruce Flatt said that investors have reason to be excited. The future looks to be “an excellent environment for investing.” That’s because, after a year of cuts and cost savings, the company is now better positioned to start selling holdings and return cash to investors.
Part of this has already started, with transactions higher in 2024 than they were back in 2023. Meanwhile, BAM stock has already been active, making US$55 billion in investments in 2023. It now has US$107 billion of fund commitments that haven’t been drawn out yet, plus US$3 billion in cash.
Why am I mentioning all of this? To show you that even though profit fell year over year, there is still a strong bottom line here for BAM stock. Further, there should also be top-line growth in the near future as well. All this will help support the company and its growing dividend.
Grab the dividend, stay for growth
So, if you’re looking for passive income, BAM stock certainly offers it right now. You can grab hold of a dividend yield of 3.84% as of writing and look forward to a higher dividend in the future. Yet right now, it still trades at just 1.67 times book value, offering value for today’s investors.
Then, in the near future, it’s clear the stock should also see more growth from its investments. Management “sees a path to riding through this,” when referring to higher interest rates and the real estate market in general. Meanwhile, “this is where the opportunity is created.”
So, if you’re worried about the future of BAM stock, don’t be. In fact, it looks like a strong and valuable stock you could confidently hold onto for the next several years.
