Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

This 1 Company Offers All the Diversification an Investor Needs!

Published 2018-11-08, 08:00 a/m
Updated 2018-11-08, 08:15 a/m
This 1 Company Offers All the Diversification an Investor Needs!

This 1 Company Offers All the Diversification an Investor Needs!

Few companies exist out there for investors to buy and truly hold an adequate basket of securities that is diversified well enough to protect said investor from calamity when stuff hits the fan.

In Canada, one company that comes close to meeting such an ideal happens to be one of the largest and most well-diversified options out there: Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM).

Brookfield is a conglomerate in every sense of the word. The firm is based in Canada and holds a significant percentage of Canada-based assets, but it’s also well diversified geographically, making this a top pick of mine for investors concerned about having too much of a “home bias” in their portfolios. I particularly pay attention to key markets for the company including the U.S., U.K., India, and Brazil as key growth regions for Brookfield long term.

The ability of Brookfield to generate higher rates of return and cash flow from emerging markets and reinvest in high-quality North American and European assets provides the right mix of quality and risk, which appeals to long-term equity holders.

Additionally, the makeup of much of Brookfield’s portfolio is in alternative assets such as real estate, assets that are low beta and provide investors without alternative assets a well-diversified option which provides excellent long-term upside at a reasonable valuation currently. The company’s forward dividend yield of around 1.5% is relatively small; however, the company has steadily increased its distributions over time and is likely to continue to do so in perpetuity, making this company a great long-term income play for those who have a long enough time horizon.

Brookfield has built an incredible high-quality global asset base which continues to grow due to two key factors that allow this company to earn above-average returns. First, the company is able to borrow money with ease and at favourable rates due to its size, scale, and low-risk nature. Second, the company’s track record and asset portfolio make Brookfield one of the first companies that is sought in times of divestiture by other firms, meaning Brookfield stands to gain from forced (merger-related) or discretionary (balance sheet-related) asset divestitures by other companies.

Bottom line

I believe that over the long term, demand for alternative assets such as those held by Brookfield will continue to grow. Brookfield remains one of the best acquirers of high-quality assets, a trend I expect to continue over the long term as market conditions change.

Stay Foolish, my friends.

The Motley Fool owns shares of BROOKFIELD ASSET MANAGEMENT INC. CL.A LV. Fool contributor Chris MacDonald has no position in any stocks mentioned in this article.

This Article Was First Published on The Motley Fool

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.