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Summary

  • As of June 30, 2014, Blackstone has $279 billion total assets under management (AUM).
  • Economic Net Income is up 89% year-over-year (yoy).
  • Distributable Earnings have jumped 128% (yoy) to $771 million.
  • Blackstone's current dividend yield is greater than 6%, and growing.

Initially founded by Stephan A. Schwarzman in 1985 with a balance sheet of $400,000, Blackstone (NYSE: BX) has morphed into a behemoth global investment and advisory firm with total assets under management (AUM) of $279 billion as of June 30, 2014.

A publicly traded firm since its 2007 IPO, Blackstone can be broken down conceptually into four investment vehicles: Private Equity (with $68 billion AUM), Real Estate ($80 billion), Credit ($70 billion) and Hedge Fund ($61 billion).

On July 17, 2014, Blackstone released its 2nd Quarter Earnings Report highlighting continued "strong performance" in all segments of the company. Economic Net Income ("ENI"), the primary measure of Blackstone's current value creation, was up a whopping 89% year-over-year ("yoy") to $1.3 billion ($1.15 per common shareholder unit).

Distributable Earnings, an important number to individual investors, increased 128% from $338 million to $771 million (yoy). Year-to-date, a record level of realizations have allowed DE to reach a level of $1.3 billion ($1.06/unit), up 72%.

With 2nd quarter Distributable Earnings of $0.65/unit, Blackstone declared a large quarterly dividend of $0.55 - reflecting an 85% payout ratio. (The ex-dividend date is July 28, 2014; payable on August 4, 2014.) While payout ratios above 65-70% give me pause, Schwarzman and I are both confident that the high ratio is easily supported by Blackstone's impressive financial momentum and rock solid balance sheet.

Longer-term investors in Blackstone will be highly satisfied to know that year-to-date distributions now total $0.90, which is a 70% raise from the prior year.

Given Blackstone's continued history of impressive growth, its diverse asset base, its generous commitment to its investors, and the current 6.4% dividend yield - Blackstone deserves a place in every serious investor's portfolio.

Disclosure: The author is long BX. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Jeff Ross's hedge fund (Vailshire Partners, LP) is also long BX.

Source: Blackstone: The Market Is Putting The Wrong Company In The Bargain Bin