The best companies can generate above-average total returns year after year. For example, Walmart And Berkshire Hathaway (BRK.A) (BRK.B 0.27%) have generated annualized returns of 12% and 13%, respectively, over the past 30 years, exceeding the S&P 500that’s 11%. In the meantime, Amazon has generated an annualized return of 18% over the past 25 years, well above the S&P 500’s 8% return.

However, as good as the returns of these well-known companies have been, they pale in comparison to those of a lesser-known wealth creator: Brookfield Company (BN 0.26%). The Canadian investment company achieved an annualized return of 18% total return over the last 30 years and 19% over the last 25 years.

Brookfield Corporation believes even better days lie ahead for its investors. Here’s a closer look at his plan for making them a lot richer over the next five years and beyond.

A simple strategy

Brookfield Corporation aims to generate returns of over 15% over the long term for its investors. The company believes that this is in a better position to achieve this goal than ever before. He has a simple plan to grow his investors’ wealth over the long term.uh:

1. Invest in good companies.
2. Run businesses well.
3. Allocate excess free cash flow wisely.
4. Align everyone with their long-term goals.
5. Evolve with the world around it.

Brookfield Corporation shares many similarities with Berkshire Hathaway. Like Warren Buffett’s company, Brookfield owns insurance businesses and buys the operating businesses it controls. It strives to identify high quality products companies which he can buy for its value. He is looking for those it can deploy their capital productively to increase their income. Brookfield focuses on companies with resilient earnings and high recurrence cash flows, such as those of infrastructurereal estate and renewable energies.

While Buffett strives to buy wonderful companies at a fair price, Brookfield often seeks to buy companies needing operational improvement. He has a more private equity mentality of fixing businesses by cutting costs to improve business efficiency.

The company then aims Allocate growing excess liquidity wisely flows produced by its operational activities, which Buffett’s company Also strives to do. Brookfield reinvests its money in its operating businesses and buys new ones. It also invests in funds managed by its alternative management subsidiary, Brookfield Asset Management. The company typically reinvests 75% of its annual free cash flow to create compound shareholder value. It will return the rest of the cash in the form of dividends and share buybacks.

Brookfield also aims to align everyone in the organization around its long-term goals. It focuses teams on clear objectives, promotes from within and aligns long-term compensation.

Finally, the company strives to evolve with the world around it. For example, it has created listed entities, namely: Brookfield Renewable Energy, Brookfield InfrastructureAnd Brookfield Company – and it added retirement and wealth solutions businesses. It has also adapted its asset classes as the global economy has changed, adding new platforms such as data infrastructure, nuclear and logistics.

Add the value

Brookfield Company Currently believes it can grow its cash flow per share at an annual rate of more than 20% over the next five years. This implies that the company will produce about $47 billion in cumulative free cash flow over the next five years, or about $30 per share. This gives him plenty of money to allocate wisely.

The company conservatively estimates that its business is worth about $84 per share today, well below the current stock price of about $55. It estimates that its ability to wisely allocate its capital should generate an annualized return on invested capital of 16%. This is expected to bring the stock’s underlying value to $176 by 2029. At the same time, given the current mismatch between the stock price and the underlying value of the businessthe total return potential is even higher, at 29% per year.

Looking at it another way, Brookfield Corporation could generate an investment of around $5,500. do today to about $17,600 in about five years, assuming the stock price trades at the company’s estimated value. This is strong return potential for a company with a long history of growing shareholder value.

A plan to enrich investors

Brookfield Corporation has been a tremendous investment over the years. The company delivers regularly total strong returns, driven by its simple growth plan value for its shareholders. The company believes it is in an excellent position to continue croissant value for its investors over the next five years, making it a big one stocks to buy now if you want to grow your wealth.