Brookfield Asset Management Inc.
Announced 7% dividend increase and initial dividends for BN and BAM
NYSE: BAM | USD 43.35 | Outperform | Price Target USD 63.00
Sentiment: Neutral
Note: We published 2 detailed reports on the Brookfield asset manager spinoff: 1) a November 2, 2022 detailed Primer outlining details of the asset manager spinoff (“Primer for Asset Manager Spinoff: Breaking Up Isn’t Hard To Do”); and 2) a December 6, 2022 report with a detailed analysis on the valuation of BN and New BAM (“Wax on, wax off: Valuation analysis of the Asset Manager spinoff”).
Summary: Brookfield announced the quarterly dividend that will be paid by Brookfield Corporation (“BN”) and Brookfield Asset Management (“New BAM”) following the distribution of New BAM shares to BN shareholders. Starting in Q1/23:
• BN will pay a quarterly dividend of $0.07 per class A limited voting share ($0.28/share annualized); and
• New BAM will pay a quarterly dividend of $0.32 per class A limited voting share ($1.28/share annualized). Of note, as we
expected, New BAM will pay a fixed quarterly dividend instead of a variable quarterly dividend.
This represents a +7% dividend increase assuming current BAM shareholders retain their New BAM shares following the distribution and implies a quarterly dividend of $0.15/share based on BAM’s current capital structure.
Our take: The quarterly dividend announced for New BAM was ahead of our forecast ($1.28/share annualized vs. our $1.10/share forecast) and the BN dividend of $0.28/share annualized was right in line with our forecast. BN and New BAM will commence trading on the NYSE and TSX on Monday, December 12.