I like investments that have the building blocks to deliver a mixture of both capital growth and dividends over time. The S&P/ASX 200 Index (ASX: XJO) dividend stock Brickworks Limited (ASX: BKW) is one of those investments in my opinion.

There are a few different segments to the Brickworks business – it has an investments segment that is delivering long-term capital growth and dividend growth itself. Brickworks has an Australian building products division, a North American building product division and an industrial property division.

It recently reported its FY24 first-half result, which was heavily impacted by lower property valuations due to higher interest rates and lower property development profits.

Brickworks reported a statutory net loss after tax of $52 million, which was a decline of 115% because of a $249 million hit relating to property revaluations and sales.

This period has shown me the strength of the core building products businesses. They have strong pricing power and have unlocked impressive efficiencies. Both the Australian and US building product divisions achieved growth of earnings before interest, tax, depreciation and amortisation (EBITDA).

Demand for building products may reduce in the short-term because of the headwinds for the economy, but Brickworks plans to use this time for maintenance activities.

The ASX 200 dividend stock can't control property prices, but it's seeing excellent gross rental income growth – HY24 saw a 17% increase of rental income to $81 million. Despite a 47% increase in borrowing and other costs to $31 million, the net trust income rose 4% to $51 million, with Brickworks having a 50% share of that.

Despite the hit caused by higher interest rates, the business has a very impressive asset base, which I think the market is undervaluing. That includes the value of its listed investments, the property trust net tangible assets (NTA), the building product segments' NTA, the market value of development land, and the net debt.

Brickworks showed that, as of 31 January 2024, its underlying value per share was $36.68. However, its share price is currently at a 25% discount to this. I think that represents a very appealing valuation.

The ASX 200 dividend stock said that once fully developed, the rental potential of the property trust could reach $340 million, compared to the current annualised rent of the portfolio, which is $172 million. It could take five years before the Oakdale East stage 2 is finished, and it may take a while for the lease renewals and review to flow through.

To me, it seems there is very strong rental growth in line for Brickworks, which can fund bigger dividends.

Brickworks has increased its interim dividend for ten years in a row and it has been 48 years since the last time the full-year normal dividend was decreased. Using the last two declared dividends, it offers a grossed-up dividend yield of 3.4%.

After a 10% fall of the Brickworks share price since 8 March 2024, I think this could be an appealing time to pounce.