Brookfield question - Stocktrades Canada

Can you please discuss the pros and cons of owning both BN and BAM as core holdings? As BN owns 75% of BAM, I gather there is considerable overlap in owning both. As I read your updated reports on these companies, it appears that DAN is long BN but does not own BAM. Is it reasonable to infer from this that you feel owning both is not a great idea? On the other hand, I thought I read that one of your dividend portfolios includes both BN and BEP, which suggests that you are not overly concerned about the overlap between BN and its subs.
Thank you for your help.

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Asked on February 12, 2023 9:15 am

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Private answer

Hey there.

The reason I own BN and not BAM is primarily because I replicated the Dividend Growth model portfolio here at it does contain BN.

We are not overly concerned with the overlap. You can construct a portfolio consisting of the flagship company (BN) and also higher yielding alternatives such as BEP. The one thing we would say is just pay attention to your overall Brookfield exposure. For example, it is very easy to over expose yourself to an individual company while maintaining low single digit exposure to each subsidiary. For example, owning 4% each of BN, BAM, BEP may not seem that bad, but overall 12% of your portfolio is exposed to the Brookfield companies. Which could be fine, that completely depends on your overall risk tolerance.

In my opinion, I do believe Brookfield Corp (BN) will be the total return play in terms of capital appreciation and dividends, while BAM, on the other hand, has the potential to provide very strong income and strong dividend growth for investors.

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Posted by Dan Kent

Answered on February 13, 2023 10:09 am

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