Brookfield Corporation Analysis – September 2024

Brookfield Corporation (TSX: BN) is a leading global alternative asset manager with over $900 billion total assets under management at December 31, 2023. It operates with 4 core businesses: asset management, wealth solutions, operating businesses (real estate, private equity, infrastructure and renewable power) and carried interest (realized profits from a sale).

Brookfield does not generally look at Net Income as a measure of its profitability. Instead, it uses Distributable Earnings as its preferred gauge.

What is Distributable Earnings? “We define DE as the sum of distributable earnings from our asset management business, distributable operating earnings from our wealth solutions business, distributions received from our ownership of investments, realized carried interest and disposition gains from principal investments, net of earnings from our Corporate Activities, preferred share dividends and equity-based compensation costs.”

Last twelve months:
-Distributable earnings of $5bn
-$1bn of capital returned to shareholders via buybacks and dividends

Distributable earnings breakdown ($5.6bn in last twelve months):
–Asset management business: $2.6bn
            – “AUM increased to nearly $1 trillion with significant tailwinds for further growth”
–Wealth solutions: $1.4bn
            “Increased insurance asset base to over $100 billion and established as a top three provider of annuities in the U.S.”
–Operating businesses: $1.6bn
            “We own market-leading real asset portfolios that generate recurring, inflation-linked cash flows”

Distributable earnings from 5 years ago was  $1.44 and is $3.20 today
Revenue base: compound annual growth rate of 21% over last 5 years

Guidance: Brookfield expects to grow distributable earnings per share by a CAGR of 20%-25% through to 2028. Lower interest rates in both Canada and the United States could also help growth prospects at Brookfield.

*I own and recommend shares of Brookfield Corporation*