• Brookfield Asset Management’s share price is down about 18% from its 52-week high.

• The company’s long-term growth plans remain unchanged and remain very attractive.

• If Brookfield Asset Management can deliver on its five-year plan, it could be a very attractive growth and income stock.

• 10 stocks we like better than Brookfield Asset Management ›

Brookfield Asset Management (NYSE: BAM) is offering investors a dividend yield that is three times that of the S&P 500 Index (SNPINDEX: ^GSPC). And the Canadian asset manager is targeting annual profit growth rates of up to 18%. If you are a growth and income investor, you should pay close attention to Brookfield Asset Management.

Brookfield Asset Management plans to roughly double earnings over the next five years, bringing fee-earning equity from $580 billion to $1.2 trillion. It’s an audacious goal, but it doesn’t come out of nowhere.

Between 2020 and 2025, management was able to increase the asset manager fee-generating capital from $277 billion to the current $580 billion. This resulted in fee-related earnings growth of approximately 15% annually.

Knowing that Brookfield Asset Management has doubled the size of its business before should give investors more confidence in its ability to do so again. However, it is essential to remember that the company operates on Wall Street, ia bear market it could impede your progress toward your long-term goals. Of course, bull markets have always followed bear markets, so any pullback is likely to be temporary.

It is also worth noting that Brookfield Asset Management’s business is diversified. It manages money in renewable energy, infrastructure, real estate, private equity and credit, serving small investors, larger investors and institutional investors such as insurance companies.

Superimposed on these five business segments are the investment themes of decarbonisation, deglobalisation and digitalisation. Management believes these megatrends represent a $100 trillion opportunity.

Assuming Brookfield Asset Management can achieve its business growth goals, which it has proven it can do, where does that leave it? That’s a tough question to answer, but you can get some insight if you consider the current attractive dividend yield of 3.3%.

Part of Brookfield Asset Management’s growth plan is to use its distributable earnings growth to drive dividend growth. If distributable earnings growth increases to 18% as projected, then the company should have little difficulty raising the dividend, on an annualized basis, at the 15% rate at which it increased the payout in 2025. So in about five years, the dividend will have doubled, using the rule of 72 to get a rough estimate.

The dividend yield is a simple mathematical equation that divides the annualized dividend payment by the current stock price. Increase the dividend and keep the stock price the same, and the yield will increase. However, consistent dividend increases tend to lead to consistent share price gains, and stocks often trade within a yield range. To maintain the stock’s current 3.3% yield, the stock price would also need to double.

Long-term investors today are looking for an attractive yield backed by a growing business. This growth will likely lead to dividend growth and share price appreciation. This is a solid growth and earnings story that would likely be worthwhile for even conservative investors.

The fundamental investment thesis for Brookfield Asset Management is sound. And investors should remember that five years is a long time on Wall Street. It wouldn’t be surprising to see a bear market between now and 2030. So it’s important to remember that this story will play out over five years, and you’re effectively making a five-year commitment to the stock if you buy it based on the company’s growth plans.

Don’t let a bear market scare you away from Brookfield Asset Management or you could end up missing out when the market recovers.

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Reuben Gregg Brewer has no position in any of the aforementioned stocks. The Motley Fool has positions and recommends Brookfield Asset Management. The Motley Fool has one disclosure policy.

Is Brookfield Asset Management stock a buy now? was originally published by The Motley Fool