Brookfield Real Assets Income Fund: Assessing Dividend Sustainability in a High-Yield Real Assets Portfolio

Brookfield Real Assets Income Fund (RA) has long been marketed as a high-yield vehicle for investors seeking income from real assets like infrastructure and real estate. With a current dividend yield of 10.58% as of September 2025, RA appears enticing at first glance. However, a closer examination of its financials and operational structure reveals a complex picture of sustainability risks that investors must weigh carefully.

Dividend History and Strategic Shifts

RA's dividend trajectory has been marked by a significant pivot. In October 2023, the fund slashed its monthly payout from $0.199 to $0.118 per share-a 40.7% reduction-raising questions about its ability to maintain prior income levels, as documented on the MarketBeat dividend page. Since then, the fund has maintained this lower rate consistently, signaling a strategic reallocation of resources rather than a temporary adjustment, according to the CEFConnect profile. While this stability suggests operational discipline, the fund's payout ratio remains a critical concern. RA's dividend payout ratio stands at -1,281.82% of earnings, meaning it is distributing far more in dividends than it generates in net income, as shown in its SEC filings. This unsustainable metric implies reliance on return of capital or asset sales to fund distributions, which erodes long-term value for shareholders - a point MarketBeat also highlights.

Leverage and Portfolio Composition: A Double-Edged Sword

RA's investment strategy hinges on leveraging its capital to amplify returns. As of December 2023, the fund reported a leverage ratio of 16.76%, with $169.2 million in borrowings relative to $968.8 million in common assets, according to CEFConnect. This leverage is financed through a mix of credit facilities and reverse repurchase agreements, with interest rates averaging 5.97% as of late 2023. While leverage can enhance yields in rising markets, it magnifies downside risks during periods of declining asset values or rising interest costs.

The fund's portfolio further complicates the sustainability equation. As of March 2025, 95.06% of RA's assets were allocated to bonds, with smaller allocations to stocks and preferred securities, according to YCharts data. This heavy fixed-income tilt suggests a focus on income generation but exposes the fund to interest rate volatility and credit risk. For instance, if bond yields rise or defaults increase, RA's cash flows could shrink, forcing it to either cut dividends or liquidate assets to maintain payouts, a risk highlighted in the fund's SEC filings.

Expense Ratios and Operational Pressures

RA's cost structure adds another layer of scrutiny. The fund incurs a 1.00% management fee on its total managed assets (including leverage) and a total annual expense ratio of 3.23%, as reported in its SEC filings. These fees, combined with the high cost of leverage, eat into returns and limit flexibility to absorb unexpected losses. For a fund already operating at a negative payout ratio, such expenses heighten the risk of a dividend cut or a shift to return-of-capital distributions, which have different tax implications for investors - an outcome MarketBeat has noted in its coverage.

Risks and Mitigants

The primary risk for RA lies in its structural reliance on leverage and return of capital. If real asset markets weaken-say, due to economic downturns or regulatory shifts-the fund's income could decline, forcing it to either reduce leverage (which would lower yields) or tap into principal. Additionally, the fund's focus on real assets like infrastructure and real estate securities may offer some stability, as these sectors tend to be less volatile than equities. However, maintenance costs and operational challenges in these sectors could offset income gains, as discussed in the fund's SEC filings.

A mitigating factor is RA's consistent monthly dividend schedule since the 2023 cut. This suggests management has prioritized income stability for shareholders, even if it means accepting lower yields. Furthermore, the fund's semi-annual reports indicate a diversified portfolio across global real assets, which could buffer against regional downturns, per YCharts.

Conclusion: A High-Yield Gamble?

Brookfield Real Assets Income Fund's 10.58% yield is undeniably attractive, but investors must recognize the precariousness of its dividend. The fund's negative payout ratio, heavy leverage, and reliance on return of capital create a fragile foundation for long-term income stability. While RA's real assets portfolio offers some insulation against market volatility, the risks of rising interest rates, credit defaults, and operational costs cannot be ignored. For income-focused investors, RA may serve as a speculative bet rather than a core holding-provided they are prepared for potential dividend cuts or principal erosion.