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Summary

  • Blackstone is a growing company with strong earnings and a low P/E of 9.5.
  • Blackstone's dividend yield for the year should exceed 5%.
  • Blackstone looks appealing from a dividend growth and momentum perspective.

The Blackstone Group LP (NYSE:BX) is a manager of private capital and a provider of financial advisory services. Its management business includes private equity funds, real estate funds, credit-oriented funds and separately managed accounts. Advisory services include restructuring and reorganization, as well as fund placement services (TD Ameritrade).

BX is current selling at trailing P/E of 16 and a forward P/E of 9.5. Last year's dividend was $1.34 per share, which would make the current yield at 4.2%. However the partnership has already paid $0.90 this year and should top last year's payments by $0.30 to $0.40 per share, raising the distribution to 5% or better. The chart for last year can be viewed below: (Taken from Interactive Brokers)

(click to enlarge)

Chairman Stephen A. Schwarzman wrote on March 17, in the 2013 Annual Report:

Strong investment performance drove record revenues and earnings in 2013. Total revenues were $6.6 billion-up 63% year-over-year-reflecting sharply higher realized performance fees and investment income. Economic net income rose to $3.5 billion or $3.07 per unit-our highest level as a public company. Distributable earnings surged 66% to $1.9 billion, or $1.56 per common unit. Total distributions to common unit holders for 2013 were up 86% over the prior year to $1.34.

Besides the record year for 2013, the partnership has continued to grow volumes and earnings. See the slide from a company presentation below:

(click to enlarge)

The company has also visualized the growth of the business over the past 6 years:

(click to enlarge)

Independent rating firms overwhelmingly have a buy on this issue. Credit Suisse has an outperform with a target price of $38.00, TheStreet has a buy with a target price of $45.95, S&P has 4 stars with a target price of $40.00, Ford Equity Research has a strong buy with a target around $43.00 and the ResearchTeam has an accumulate on the partnership (TD Ameritrade). Zacks also has a buy on this issue, citing the rising estimates on earnings for the year. Current-quarter estimates have risen from $0.84 per share to $0.95, with current-year estimates rising from $3.12 to $3.72 per share.

Conclusion

BX appears to be on a roll. It is increasing volumes and profits at a good clip. An investor can expect both partnership distributions and the price of the issue to continue growing for the next few quarters. Whether one is a momentum investor or a dividend growth investor, the stock looks appealing from either perspective.

Source: Blackstone Group LP Is On A Roll, Growing Both Earnings And Distributions