What’s the best Brookfield stock to buy right now?
Alternative assets can be lucrative, but also risky if you are not associated with qualified operators and asset managers. That is why Brookfield Asset Management (NYSE: BAM), and subsidiaries Brookfield infrastructure (NYSE: BIP)(NYSE: BIPC) and Brookfield Renewable Power (NYSE: BEP)(NYSE: BEPC) are interesting investments. Not only are they excellent vehicles for investing in alternative assets like infrastructure, renewable power generation and real estate, but Brookfield’s management also has an excellent track record of outperforming the market.
But which Brookfield investment is the best buy right now? In the November 10 edition of “The Wrap” on Motley Fool Live, host Jason Hall answers this question for a listener.
Brian Feroldi: Jason, what’s the best Brookfield stock to buy right now?
Jason Hall: It is a good one. It had actually been since the very end of the last hour. and I knew it was going to happen. It’s difficult because there are a couple of things you need to consider.
First of all, you have Brookfield Asset Management. It is the parent entity that earns its money, mainly, most of its income comes from asset management fees. For high net worth investors, institutional investors like pension funds and that sort of thing, they go there as an expert in alternative assets. So you think about real estate, corporate debt, other ways to make money besides buying and selling stocks, they’re really really good at that.
Now they also have all of these subsidiaries, Brookfield Infrastructure, which is BIP. This is worth discussing – it gets convoluted – each of these affiliates trades either as a master limited partnership, which is the three-digit ticker, hence Brookfield Infrastructure as BIP. They are also available as an economic equivalent as a corporation. So, Brookfield Infrastructure – as BIPC – trades at a higher price because there is a premium to owning it as a corporation compared to a limited partnership. I won’t go into details here as it would take 20 minutes.
Brookfield Infrastructure owns things like water pipes, natural gas distribution, toll booths, toll roads and all that sort of thing, telecommunications infrastructure. Next, Brookfield Renewable, BEP and BEPC, is the hydroelectric, wind and solar power generation that it sells. I think Brookfield Renewable has been the best investment this year maybe over the past couple of years. It has an excellent track record ahead of it as renewables continue to decline and demand continues to grow.
I think Brookfield Infrastructure is probably the best value right now. I think it’s usually probably the lowest yields this year, that he has the highest dividend yield, and he still has an incredible and wonderful outlook. These are my two favorites. I think for income investors these are two great investments. Dividend growth investors, they’re both great. I think if I bought today I would probably buy Brookfield Infrastructure. Brookfield Asset Management is less a game on dividends and more a game on capital growth of them being able to capture more and more assets under management and earn more on the costs of managing these assets for investors. I tend to prefer Brookfield Infrastructure. Right now, this is my favorite of all those.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.