The Best Dividend Growth Stock to Buy Now

In today's video, I am going to give you a full update on Brookfield Asset Management because the company reported its earnings last week. The earnings results were very good and then I also want to explain why I think that this is one of the best dividend growth stocks in the entire market, if not the best actually. And this is one of the main reasons why I loaded up the boat on Brookfield Asset Management stock while it was in the dip over the past couple of months, especially in my TFSA and my retirement savings accounts so that I could get all of those dividends completely tax-free and fully benefit from the future compounding of this business. But there's a lot that I want to cover in this video because not just earnings came out, but there has been a significant amount of bullish developments for Brookfield Asset Management as well. The stock is also up roughly 30% since I started aggressively buying back into it and it's up another 4.6% on the day today after announcing a massive partnership with Nvidia. So, as I said, there is a lot that we have to cover in this video. So, let's start off by taking a look at the earnings highlights and I'm going to run through this pretty quick. All right, so starting from the top here, this says fundraised a record $77 billion in the second quarter, $98 billion year to date. Quarterly fear related earnings of 88 million up 20% year-over-year. Quarterly distributable earnings of 707 million up 15% year-over-year. Then the CEO said, "Our ability to fund raise across the largest and most diverse pools of global capital and deploy into the largest and most attractive investment themes continues to accelerate. The current environment is increasing the demand for highquality real assets and essential service businesses." Now, this is one of the main reasons why I invested in the Brookfield ecosystem as a whole and also why I rotated so much capital into Brookfield Asset Management. For perspective, I purchased over $100,000 of Brookfield Asset Management shares in that dip that the stock saw. But to also be fully transparent, as I said on my channel, I did sell down my BN position to rotate it into BAM because I thought that BAM was offering more value. But one of the main reasons I did that is because I saw tremendous tailwinds coming for Brookfield Asset Management's business because there is such a large amount of demand for capital right now. We're going to take a look at an interview with Bruce Flatt and some of the other private asset managers later on in this video, but they have made it very clear that trillions of dollars needs to be raised to build out AI infrastructure around the United States and also across the globe. So, Brookfield Asset Management having that decadesl long track record of building out the exact infrastructure that is needed for AI infrastructure as well, I thought would cause this business to see tremendous tailwinds. And that thesis so far looks like it is playing out because as we just read, Brookfield Asset Management has already raised $98 billion year to date. Its fee related earnings are accelerating and grew 20% year-over-year. And its net income is also up 15%. And I believe that this metric is also going to continue to accelerate. So across the board, it looks like this was another strong quarter from BAM. Moving on to the next screenshot though, here we can see that capital deployments, this is Brookfield actually using its capital to buy assets and invest was up to $21 billion for this quarter, up from 14 billion in the second quarter of 2025. So, Brookfield Asset Management is continuing to find opportunities to deploy capital and I believe that their capital deployments will continue to accelerate as well. All right. Now, this next screenshot talks about carried interest and carry eligible capital. And here this says BAM has accured $ 1.9 billion of unrealized carried interest on these funds, which is net of BN's portion. BAM's carry eligible capital has also 3xed since the spin-off and is now at $187 billion. Carried interest can sound kind of confusing. So the easiest way to put it is carried interest is the investment gains that Brookfield Asset Management owns on its funds. Basically, if BAM invests its customers funds and actually produces outperformance above the target annual returns, then a portion of the outperformance goes to BAM as earnings in the form of carried interest. So this $ 1.9 billion that they are talking about is future earnings on existing funds due to its outperformance. So it's not going to be $ 1.9 billion of earnings right now, but it is very much so very real future earnings. And this number is continuing to grow. And as BAM continues to raise more capital and deploy more capital, the amount of total capital that they can earn carried interest on is continuing to grow as well. And that is why they say in the screenshot that their carry eligible capital has 3xed since the spin-off and is now at $187 billion. So as BAM continues to grow its AUM, it also grows this carried interest future earnings stream that we're not seeing today, but in the future will produce very real shareholder value. What BAM also does is shows us the target carried interest on an annualized basis. Assuming all of their funds meet their targets and their return goals and on their current carry eligible capital, their total annualized carried interest is now at 1.3 billion. I've also been tracking BAM's unrealized carried interest every single quarter, as far back as I could possibly go. And this is the growth to this metric. And you can see that it is now sitting at that $ 1.9 billion figure. And as I said, this is very real future earnings for shareholders. And this earnings stream is growing rapidly. I do the same thing for annualized carried interest. And this number has more than doubled since the third quarter of 2023 and has been growing pretty much every single quarter. And again, it is now sitting at about 1.3 billion. I also have been tracking the carry eligible capital and you can see how quickly this metric has been growing and again it is sitting at an all-time high of about $180 billion today and as BAM continues to fund raise and deploy capital this metric should continue to grow over the longer term. So now let's move on to some of the conference call highlights in the transcript. And here the underlying segment says, "We estimate $10 trillion in annual economic productivity potential for AI requiring $10 trillion of capex across the AI value chain, including energy, data centers, compute, and strategic agencies. For investors, the important point is that this is a physical infrastructure, the critical backbone of economies that are becoming more digital, not a technology bet on which model, chip, or application ultimately wins. We own and operate approximately $85 billion dollars of digital infrastructure and are one of the largest energy businesses in the world. So in the screenshot, BAM's management is saying that they believe there needs to be over $10 trillion of investments to build out AI infrastructure over the coming decades. And they are also making it clear that this is not a bet on which technology, which chip company or which model is going to win. This is the physical compute infrastructure and energy infrastructure that needs to power all of this future technology. This is not a bet on anthropic, open AAI or even Gemini. It's a bet on the demand for AI continuing to grow over the coming decades and the world needing a lot more resources and infrastructure to power it. Moving on to the next quote. This one comes from the CEO Connor Chesy and he says, "Is 2027 going to be as big as 2026? probably not, but it will still be strong nonetheless. To your comment on fee and earnings outlook going forward, I would say the fee trajectory feels rock solid through the end of this year and into the next. In Q4, we do lap a very strong prior year quarter, which may reduce the year-over-year growth for that one quarter. As we turn to 2027, the exceptional fundraising in 2026 positions us to maintain that accelerated growth trajectory into the next year. Perhaps the last point I would make is one thing we're pretty excited about, which is due to significant investment outperformance in some of our strategies since we spun out at the end of 2022, is that we expect to begin generating and realizing carried interest earlier than we previously forecasted with some realized carried interest expected this year. That's certainly going to be an upside to our earnings that we probably were not forecasting 6 or 12 months ago. So, going back to what I said about carried interest earlier on in this video, Brookfield Asset Management has seen such significant outperformance in some of its funds that now they are starting to realize carried interest or essentially realized investment gains far ahead of schedule and they could actually see some realized carried interest gains towards earnings before the end of the year. And if they do, then this could accelerate earnings even further for Brookfield Asset Management because their 20% earnings growth guidance out to 2030 and especially for this year did not include any realized carry. So, if this does come through, then it will be a pure boost to their earnings for 2026. And this is something that I'm not even modeling into my DCF that we're going to get to at the end of the video. So, for me, this is all just upside for earnings and the business. All right, so those were the conference call highlights that I wanted to cover in this video. So what I want to do now is show you a rapid fire of some of the deals that Brookfield has been doing over the past couple of months. So on June 11th of this year, Brookfield announced a 1 gawatt renewables deal in Vietnam. On June 10th, they announced a $7 billion investment into renewable energy across Australia, doubling one of its portfolio companies renewable energy portfolios. On July 20th, Brookfield announced a $5.2 billion acquisition of LXP, which owns one of the largest portfolios of modern warehouse and logistics facilities in the United States, comprising of approximately 53 million square feet across 108 properties and attractive industrial markets in the Sunb Belt and Midwest regions. Last month, Brookfield also announced its first Middle East private equity fund closing, raising $2 billion from investors. And this fund builds on Brookfield's exposure to the Middle East. On July 30th, it launched Lumara Energy, which is a renewable energy platform in India with 6 gawatt of power to be deployed. And the most recent major piece of news that is causing the stock to continue going higher is that Nvidia announced a partnership with Apollo, Black Rockck, Blackstone, Brookfield, Goldman Sachs, and KKR to build financing platforms aimed at mobilizing more than $500 billion in third party capital for AI infrastructure. This is basically Nvidia going to all of the largest private equity firms and saying, "Hey, we need to raise half a trillion dollars to continue funding the buildout of AI infrastructure." And this is what is causing all of the private equity stocks to continue spiking. All of the CEOs of these companies also did a 35minute interview with Becky Quick on CNBC. And I watched the entire interview and there are three main highlights that I want to point out. In specific with Bruce Flat who is the CEO of Brookfield and also with Larry Frink who is the CEO of BlackRock which is the largest private equity firm in the world. So I want to play the highlights and then we can discuss them afterwards. >> Larry, let me get you in because you're not here around the table today, but I I'd like to get your perspective on this. Is this new money that's going to be spent? Have you already raised this money? Is this money that you were going to be deploying into AI anyway and it's just kind of funneling it towards certain partners? >> Well, first of all, hi everyone, Jensen, thank you. Thank you for the trust that you given Black Rockck. Uh we have some capital now, but we're going to be raising quite a bit more capital. Um as Jensen said, each gigawatt costs 50 to$60 billion to build out. And we're talking about in the United States alone, we're going to need over 70 gawatts of power to fuel this. And then you add up everything else around the world. Um it's it's going to be an enormous financial opportunity. As Jim was talking about American exceptionalism, it has to flow through the American capital markets because this is the biggest source of capital. But the other angle and I think this is so important that we must also understand you know there is quite a bit of negativity around AI in data centers right now but let's be clear this is going to be creating a huge amount of jobs um you know you think about even a 100 megawws of of a data center requires as much as three million hours of workers and and so this should be looked upon as a great growth opportunity for the United states furthering growth elsewhere in the world and most importantly we need to raise this money as fast as possible and and put this to work uh because I think it's really imperative that the United States is the leader in AI in the world and I think we need to be the leader in the dispersement of this technology around the world and I think this is why this is so critical and I applaud what Nvidia has has done bringing all these firms together and saying we have a common goal we need to raise $500 billion. Obviously, that's an unprecedented amount of money, but we're going to have to raise trillions of dollars over the coming years. And and I do believe this is going to be representing a fantastic investment. In fact, I think it's going to be such a large investment. Over time, you're going to see more and more allocation in in into this asset class. Jim talked about compute as an asset class, but importantly, I look at the financing of data centers. Um, this is the very beginning like what it was when I started in the mortgage back securities market in the 1970s and I look upon this as as a next future for financial engineering. All right. So, in this first clip, Larry Frink is saying that to build a single gigawatt of compute capacity now costs 50 to60 billion. And all of these private equity firms and Jensen, the CEO of Nvidia, are saying that the US alone is going to need over 70 gawatt of compute capacity. This works out to $3.5 trillion of investments to build out all of this capacity. Then what he is also saying is that $500 billion sounds like a lot of money, right? But he believes that there is going to need to be even more. There's going to need to be trillions of dollars of investments. And this is partly because the United States has made it pretty clear that they want to remain the leader of artificial intelligence. I think that this is partly for national security reasons because this is a brand new technology that is extremely powerful. So the United States wants to make sure that they remain the leader and they have the upper hand on potential adversaries to put it in another way. And I do believe that the United States maintaining the forefront of artificial intelligence could become a political issue and actually see government funding at some point in the future. I don't think that's too far out given everything that they are saying. And I also want to stress how unprecedented it is that all of the CEOs of these private equity firms are sitting on one panel in a single interview on CNBC with Jensen. I don't think I've ever seen this before where all of these private equity managers are coming together and saying this buildout needs to happen. There is so much demand. We cannot build fast enough and we are just getting started. This is also partly why on my channel I have been saying that pretty much every dip that I see in the market I think is a buying opportunity right now because I think the overall market is going to be going higher from the AI buildout. I think that we're not even close to being done and I think that this this overall theme propelling the market higher still has years to run. So whenever the market sells off, you know, the companies building data centers or the chip stocks, I'm not specifically in the chip stocks or they're selling off to companies that are directly exposed to the AI buildout. I think it's all short-term because over the long term, I think the fundamentals of these businesses are going to continue growing and accelerating for the next few years. And just based off everything that I continue to see in earnings and fundamentals, you know, from Amazon, Meta, Microsoft, Google, with their cloud businesses exploding with all of the private equity firms earnings also accelerating with the chips business is accelerating. It just doesn't seem like it's going to slow down anytime soon. And in fact, they need even more capital to continue investing in the AI buildout. I think that I'm getting a little bit ahead of myself, though. So, let's move on to the next segment of this big interview. And now we're going to hear from Bruce Flatt who is again the CEO of Brookfield >> up here and here. Okay, let's talk about Brookfield in particular what you guys are doing. >> Look, just on Brookfield in particular. We've been building out backbone infrastructure since the company started and uh and originally it started with enormous amounts of power uh uh solar, wind, gas. we moved to data centers and with Jensen we've now been moving to compute >> uh both financing but also building this compute and we cannot build enough power we cannot build enough compute for the demand that John's talking about so this is not about uh is there too much financing being made it's that we can't build it fast enough >> but the question always becomes will the demand stay at those levels and and And Jensen, you see this, you see further out than probably anybody on what's happening here. Is there a point where we can't keep up at the moment, but the demand changes. >> Look, I think what's what's and Jensen will have a an really good opinion on this one, but what we're seeing in our industrial businesses is we are just scratching the surfaces in using AI and the productivity advances that it's giving us. and we don't even know how to use it yet, but the productivity advances that they're giving us are incredible. >> So, in this clip, Becky Quick asks a great question and that's, is the demand really there? Are you guys going to be able to deploy all of this capital and then have the demand come in where you actually produce a return on your investment or essentially what she's trying to say is are you guys overbuilding and what's the risks here? And Bruce Flat's response is also what Larry Frink said in a previous interview that I shared on my channel about a month ago, which is that these businesses, you know, the largest private equity firms, they are deploying AI inside of their portfolio of companies and they are seeing tremendous benefits. So they are seeing the realworld efficiencies and benefits from artificial intelligence and that is what is giving them so much conviction that these efficiencies are going to spread like wildfire across the economy at some point in the future. What Larry Frink said in the interview that I shared previously on my channel is that AI needs to continue becoming cheaper and cheaper because it's really only the largest companies and most wealthy companies that have the most access to resources that can fully benefit from the efficiencies of AI so far. So, we need to continue lowering the cost of AI so that more and more companies can adopt it and that these efficiencies can spread throughout the economy. And that's actually what Meta is working on. I got to talk about that in a video this week. But Meta wants to become the company that lowers the cost of AI so that small businesses and individuals can also benefit from the technology and how powerful it is. But again, what is giving these companies so much conviction in investing in AI literally hundreds of billions if not trillions of dollars is because they are seeing the realworld benefits within their own businesses and eventually more and more businesses are going to want the same thing. So the demand is real. It's going to be there because it is going to increase the profits and efficiencies of pretty much every industry. So now let's watch the final clip that I want to share with you. >> Bruce, >> the the one thing I would just end with is that the power is what drives all of this. >> The access to energy and we need to build more faster and there is a financing system for power. Like it's not new what Jensen's doing with compute. It will compute will get to where power is. There is but but it physically has to get bitten underwritten and like we have 14 nuclear plants >> that were in various stages of construction today. >> Wow. >> And it will be another 40 with another hundred coming. Oh, they're we're going to get them done. And this is the first time in a long time that marketdriven forces can build out the sustainable energy necessary around the world back without government without government funding. This all market driven >> we're we're building these uh ourselves and they're going to get built all across the United States and and remember we bought Westeros out of bankruptcy seven years ago. Nobody was building a nuclear plant and there's gonna there's a renaissance going on today in the United States uh led by Westinghouse that is incredible largely because it's it's carbon-f free it's base load and it's the next energy that's coming like today today you're everyone's worried about today but if they knew there was more coming that's why it takes 5 years to build a plant but if you know what's coming you can consume more of your margin of safety of energy >> so are these concerns about whether we can meet this demand over overdone at this point. Do do you think Jensen that from where you see things the demand level and how we're building up around it that it's going to be okay? It'll all work out. We're going to be constrained for some time and pretty much across the board from chips to memories to packaging to systems um photonics connectors land power construction workers uh the whole thing the the entire supply chain up and down behind behind me upstream all the way downstream. All right. So, in this final clip, Bruce Flatt makes it clear that energy is still one of the largest bottlenecks for the entire AI buildout. And he specifically talks about how Brookfield is building 14 nuclear reactors right now. And he made it clear, these are going to get done. The US government is now helping finance these nuclear reactors. Then he says, we're building 14. There's going to be 40 and then there's going to be another 100. There is a nuclear renaissance going on within the United States. and it probably will spread throughout the globe as well. Now, what's interesting, especially for Brookfield shareholders, is that Brookfield purchased Westinghouse, I believe it was in 2018, out of bankruptcy. And Westinghouse is arguably the most important nuclear technology company in the entire world. And Westinghouse is now leading this renaissance of nuclear buildout. In fact, Westinghouse has filed an S1 to go public. So, they could be a publicly traded company in the market here soon. And Brookfield owns 51% of Westinghouse still with Kamo owning the other 49%. And if Westinghouse does end up going public, then it could unlock a significant amount of value for Brookfield shareholders now and over the following decade as this nuclear renaissance happens. Then what Jensen said is that they are supply constrainted across compute, chips, power land electricians workers all of it. All of it is still so constrained because the demand is still outweighing supply across the entire chain. That is also why I believe that every single dip as long as you know the PE of the markets and the specific stocks don't get up too too high. I view every single dip as a buy right now. I believe that the market is going to continue going higher and I also believe that Brookfield Asset Management, the data center construction stocks that I own, even the construction industry as a whole is going to continue going higher because they are making it clear this buildout is not slowing down. It's accelerating and it's probably not going to stop for at least another 5 years heading into the 2030s. So, I just believe that there are so many tailwinds in the market right now from this buildout, from the efficiencies of AI, from the demand of compute that I just don't see what's going to slow it down and stop it at this point. And that's also why I have so much conviction or why I had so much conviction buying so much Brookfield Asset Management when it was in the dip because I thought that the fears were just silly in the private equity space. And I believe that the bottom for these stocks is now officially in. So now let's quickly talk about So now what I want to do is quickly show you my DCF on Brookfield Asset Management stock to show you why I believe that it is still cheap and still one of the best dividend growth stocks in the market. So let's just head over to Stock Unlock really quickly and let me load up my BAM DCF which is right here. So over the next 5 years I have Brookfield Asset Management growing its earnings by 18% annually and their current guide is for about 20% annual growth. So this is slightly below their guide. I also have them trading for a PE ratio of 30, which is below the company's long-term average since it has spun off of about 32 to 35. And I believe that BAM is actually trading for about a 30 PE right now. Then I also have BAM growing its dividend per share by 17% annually over the next 5 years. I also believe that they will be higher than this because they have made it clear that they want the dividend to grow in line with the earnings. But just to be a little bit more conservative, I put it at 17% annual growth. Now, with these inputs, we get a 19.7% compounded annual growth rate, which to be clear, also factors in all of the dividend payments. This also would be a fair value of $83.65 US and a future share price of almost 121 bucks, which means that the stock would more than double over the next 5 years. Now if we also take a look at the dividends this means that the future yield on cost if the dividends continue to grow by 17% annually would be 8% relative to today's share price. That is more than a double to the dividend per share over the next 5 years. The future dividend per share would also be $441 US by the way. And this right here is why I believe that Brookfield Asset Management is one of the best dividend growth stocks in the market because the future dividend yield just over the next 5 years would be 8% at the same time as the share price could more than double which means that this stock could offer a very high future dividend yield as well as more than double in share price over the next 5 years which ultimately leads to the shareholder value being created being tremendous. Now, another thing that I want to point out is that this DCF does not factor in any realized carried interest. This is solely from the company's fee related earnings and them just growing the business. So, when that realized carried interest does come in, then that could further accelerate earnings growth, but it will be more volatile, which is why I don't want to factor it in. So, I view that as future earnings that could just boost shareholder value over the longer term and maybe even paid out as special dividends, which probably is what's going to happen. But for all of these reasons, I continue to believe that Brookfield Asset Management is undervalued in the market. It's probably one of the best dividend growth stocks in the market right now as well. And I believe that this business is going to continue accelerating and growing at least for the next 5 years. So, personally, I am very happy that I loaded up in the dip. I made that switch from BN to BAM, and I bought a lot of BAM, and I am up roughly 30% on that position already. And that's going to wrap up my update from Brookfield Asset Management's Q2 earnings and some of the major news that has been coming out that is propelling the stock higher. If you enjoyed this video, then please leave a like on it. And if you want to see more content like this, then please consider subscribing to my channel. And as always, thank you so much for tuning in. I truly do appreciate it and I hope to see you again in my next