BAM is undervalued; cheap multiples, high dividend yield/growth, and resilient fundraising support a bull thesis.

Now, let's move on to the second stock I've bought a lot of in the market, which is BAM, or Brookfield Asset Management, which you're probably already familiar with.

I still think the stock Brookfield Asset Management looks very cheap, and if you know me, you know I'm not one for a lot of technical analysis. It's not my focus. I focus on the fundamentals first, but when I look at Brookfield Asset Management's stock price and its historical chart, it looks like the stock is starting to bottom out as well.

This is also supported, at least in my opinion, by the fact that the price multiples for this business are very cheap, and that the stock and its fundamentals continue to grow very well.

So, I think at some point this stock will bottom out, and obviously, I expect the bottom to be very close, if it hasn't already been reached .

Right here, we can see that Brookfield Asset Management's dividend is currently around 4.4%. So, the current yield on this stock today is 4.4%. That's a very high dividend yield in the market right now.

Furthermore, one of Brookfield Asset Management's key objectives is to continue increasing its dividend by 15% annually, which means the dividend should double every 5 Approximately five years.

by 15% annually, which means the dividend should double every 5 Approximately five years. So, in five years, this dividend yield based on today's cost of the stock should approach 9%.

After another five years, it should reach 18%, and then in another five years, it could reach 36%.

This is one of the main reasons why I believe Brookfield Asset Management is the most attractive dividend growth stock in the market right now.

It's very rare to see such a high dividend yield with similarly rapid growth prospects. In the long run, if they actually manage to achieve this growth, the dividend yield on today's cost of the stock could be enormous.

That's why I've filled my tax-deferred accounts with Brookfield shares, because I won't pay any taxes on those dividends. I can take full advantage of that and then reinvest those dividends to buy more shares, which will increase the stock's compound annual growth rate.

So, I believe Brookfield Asset Management is undervalued in today's market just by looking at its dividend yield and growth prospects.

Furthermore, the company's forward price-to-earnings ratio is... Brookfield Asset Management is currently at 21.7. Its long-term historical average since the company's IPO has been around 26.9.

So, it's currently trading well below its historical forward average price-to- earnings ratio .

Again, that's forward price-to-earnings; on a 12-month basis , the stock has historically traded at more than 30 times earnings because it's a high-quality company that distributes most of its profits as dividends.

I know there are a lot of concerns surrounding the private equity sector this year with redemptions and investors trying to withdraw their funds, but this doesn't seem to apply to Brookfield, as the screen shows the company's total fundraising growth continuing in the right direction.

For 2026, they expect to have a record-breaking year for fundraising by a significant margin. So, Brookfield Asset Management continues to attract more capital despite all the negative headlines, news, and investor concerns in the private equity sector.

Brookfield's ability to continue attracting more capital has resulted in its fee-related earnings growing at a compound annual growth rate of 16% since 2020. They saw a slight slowdown in growth between 2022 and 2023, but the business has accelerated strongly and is

Over the next five years, they also say they believe they can achieve a compound annual growth rate (CAGR) of over 20% per annum, but official guidance points to annual growth between 15% and 17% .

Again, they see a path to achieving a 20% CAGR through 2030.

I've also been tracking BAM's historical guidance against its current performance, and its fee-related earnings are actually ahead of schedule in previous years . However, its distributable earnings are slightly behind guidance, largely because its carry returns are coming in at a slower pace than expected.

That said, BAM's unrealized returns are accumulating at an incredible rate and have already reached $1.9 billion. These are real future earnings that will materialize at some point.

The timing of that is somewhat uncertain, but when those earnings start to materialize and Brookfield begins to sell With those investments and the resulting profits, their distributable earnings could grow significantly from here.

Now, let's take a quick look at my discounted cash flow (DCF) model for BAM. In this model, I'm using BAM's earnings over the next five years, assuming they will grow by 15% annually, which is at the lower end of their current guidance.

I've also set an exit price-to-earnings (P/E) ratio of 25, which is lower than the stock is trading at today. Again, historically, this company has traded at over 30 times earnings.

Finally, I'm assuming they will continue to increase their dividend by 15% annually, which is one of the company's key objectives. Using these inputs, we get a compound annual growth rate (CAGR) of 17.3% for total shareholder value over the next five years.

I think these inputs are skewed to the more conservative side. Because again, BAM believes it can realistically increase earnings by 20% annually over the next five years, and the P/E ratio has historically been above 30.

If we set Brookfield Asset Management's P/E ratio at 30, Taking into account some expansion in the multiple over the next few years , and assuming they achieve their 20% annualized earnings growth guidance, the compound annual growth rate (CAGR) rises to 25.8%, which is a great 5-year return.

Now, I clearly think this discounted cash flow model is optimistic. So, in my opinion, I think BAM will likely achieve annualized returns of 15% to 20% over the next five years, which I consider a very strong return.

This is exactly what I'm aiming for in my portfolio , and I think today's entry price can achieve this with low risk, especially considering that BAM currently offers a dividend yield of around 4.5%.

For the stock to achieve an annualized return of around 15% over the next five years, the stock price only needs to grow by about 10% annually . If it's achieving 15% annualized earnings growth, I think the company will be able to achieve this, and the stock will be able to do the same.

So, ultimately, what leads me to believe is that Brookfield Asset Management's stock "It's undervalued in today's market, especially if they manage to meet their expectations. But even if the results fall below their minimum forecast, I think the stock still looks very attractive here.

That's why I've made Brookfield Asset Management more than 6% of my portfolio , and it's one of the key stocks I continue to buy. If the stock price stays low and the market doesn't see what I see here over time, and the company continues to grow its fundamentals, I'll continue to add more and more to my portfolio because I simply believe it's one of the best risk-reward investments I can find, especially since it's been impacted by rising interest rates, which I don't think will significantly affect the core of the business.

So, yes, I think the current situation for BAM stock is very attractive, and that's why I've continued to increase my investment in this company.