Investing $1,000 in this High-Yielding Stock Could Potentially Amass Close to $3,000 by 2029.
Brookfield Corporation (BN shedding -1.52%) stealthily boasts impressive returns over the past decades. This global investment juggernaut has outshone the S&P 500 (^GSPC upward by 0.61%) by a significant margin, yielding an annualized 18% compared to the S&P'500's 11%. Even rivals like Berkshire Hathaway (13% annualized) and industry giants Walmart and Amazon (12% and 18% respectively, in the last 25 years, versus Brookfield's 18%) have fallen short.
The confidence is high within the investment team working on this powerful enterprise. Brookfield estimates a potential rise in their company value to $176 per share by 2029, prompting substantial gains for investors, given the shares currently hover around the $60 mark, suggesting a chance for investors to nearly triple their investment.
Numerous growth engines
Brookfield Corporation aims to deliver annualized returns of 15% or more for its shareholders. This ambitious target stands out, given the typical 10% average annual return from the S&P 500. However, the company believes it is better positioned now than ever before to achieve its ambitious goals, given the potential expansion of its businesses that tap into significant growth trends and beneficial tailwinds.
For instance, the company's infrastructure operations, spearheaded by Brookfield Infrastructure, are capitalizing on the immense global need for infrastructure investment. Brookfield estimates the world needs around $100 trillion to maintain, upgrade, and build infrastructure over the following 15 years, with an estimated market opportunity of over $8 trillion for AI-related infrastructure in the next 3-5 years. Boldly, Brookfield Infrastructure currently has an organic capital project backlog of $8 billion, along with $4 billion of projects in development.
Another example of this growth engine is seen in Brookfield Corporation's renewable energy operations, led by Brookfield Renewable. This division is benefiting from the rapidly escalating demand for renewable energy, fueled in part by the AI data center boom.
Brookfield anticipates immense growth in its wealth solutions division and alternative asset management platform. The company also aims to leverage the abundant free cash flow produced by its businesses to search for new sources of earnings.
Value enhancement
Brookfield Corporation believes it can accelerate its earnings per share by more than 20% annually over the next five years, an intense increase compared to the 18% annualized earnings growth it has managed in the past five years. This impressive anticipated growth could result in a staggering cumulative $47 billion, or $30 per share, in free cash flow. Around 75% of this estimated sum is earmarked for retention, supporting the company's mission to compound capital for its investors. Brookfield plans to return the remaining 25% to shareholders through an expanding dividend and strategic share repurchases.
The company sees delivering this growth push increasing the intrinsic value of the firm by $176 per share by 2029, even when assuming a modest valuation multiple of 15 times its distributable earnings. This implies an average annual return of 16% from its prospective current value of $84 per share (under the equal 23x distributable earnings multiple typical of its peer investment companies). This valuation is notably higher than the present share price of $60.
If Brookfield achieves its 2029 growth target of $176 per share, it will offer even more compelling total returns from today's share price. For example, a $1,000 investment in Brookfield Corporation at its current share price has the potential to grow more than $2,900 by 2029.
Engine of Growth Unbroken
Brookfield Corporation has proven to be a goldmine for investors over the years, and it anticipates continuing the trend of creating major value for shareholders over the next five years. This wealth-producing machine's impressive growth potential makes it a superior stock purchasing choice at the moment.
Enrichment Data:
Overview:
Brookfield Renewable, a subsidiary of Brookfield Corporation, stands to benefit from several key strategies and influential megatrends in its path to substantial growth over the subsequent years. Below are the key factors driving this growth:
- Demand for Clean Energy:
- The rising demand for clean energy drives this growth, buoyed by the data center sector's expansion and the broader electrification movement. This need is amplified by the AI revolution, which necessitates reliable, durable power assets with lengthy operational lifespans[1].
- Asset and Capital Recycling:
- Brookfield Renewable successfully scaled its asset recycling activities, generating superior-quality, derisked assets through operations. This approach yielded impressive returns, notably from the sale of Saeta, which returned 3 times the initial investment[1].
- Development Pipeline and Commissioning Projects:
- Brookfield Renewable boasts a substantial development pipeline of approximately 200,000 MW, with plans to install approximately 10,000 MW of new renewable energy capacity each year by 2027. This pipeline is expected to provide a consistent stream of new projects and assets, driving FFO growth[1].
- Strategic Acquisitions and Investments:
- Brookfield Renewable has made significant investments in growth opportunities, such as the acquisition of Infinium and Neoen, totaling $12.5 billion (equivalent to $1.8 billion for Brookfield Renewable). These investments broaden the business and mark the biggest investment year in the company's history[1].
- Long-term Contracts and Revenue Stability:
- Over 90% of generation comes with contracts, with around 70% of revenues tied to inflation. The staggered contract structure provides ample re-contracting possibilities in a rising pricing climate and the capacity to finance future growth[1].
- Hydroelectric Segment Growth:
- Although challenged by recent droughts, the hydroelectric segment's growth is anticipated to recover by 2025, contributing to growth. The long-term benefits of the hydro portfolio, such as conveniently scheduled, predictable renewable generation, bolster future cash flows[1].
- Global Footprint and Market Positioning:
- Brookfield Renewable's global team, scale, and strong capital position its market positioning in attractive jurisdictions for high-return projects. Its relationships with global suppliers and market positioning enable it to capture the accelerating corporate demand for renewable energy effectively[1].
- Focus on Renewable Energy:
- Brookfield Renewable's commitment to renewable energy, particularly hydro, solar, and wind projects, positions it favorably in the market. The company's readiness to make sizable, daring deals and divest underperforming assets strengthens its growth prospects[2].
These strategies and megatrends fuel Brookfield Renewable's anticipated growth, setting it on course to deliver significant annualized returns in the coming years.
Investors looking to capitalize on this growth potential might consider allocating funds towards investing in Brookfield Corporation's shares. With the company's focus on finance and money, these investments could yield substantial returns, especially if Brookfield Corporation's ambitious targets are met.
Moreover, the company's commitment to various sectors such as infrastructure, renewable energy, and wealth solutions, indicates a financially sound strategy. This multi-pronged approach to finance and investment ensures a diversified portfolio, which can potentially help weather market volatility and maximize returns.
