Investors have been crying for years for high tech outfits to declare higher dividends – or any dividends if they do not do so already, including the personal computer behemoth Dell (NASDAQ:DELL).
The company has been struggling as margins have fallen and more and more of their market is being eaten away by tablets and netbooks. That being said, Dell is still a huge, profitable company with lots of cash. Dell and its cash and business is now part of a “take the company private” battle between its founder Michael Dell and Carl Icahn, now offering a higher price for than Dell has said it would pay for the company.
How can you turn their cash into your cash before someone wins out?
Turn to Blackstone Group (NYSE:BX), the investment firm that is now part of Icahn’s counter off to buy Dell. Even if they do not win, Blackstone has been re-discovered by many on Wall Street – it has run, has been selling off due to the Dell fight, and is establishing a new base around $20. Did I mention it has a yield of 8.5%? That is how you get cash, indirectly, from what is going on with Dell.
Blackstone went public as the financial crash was unfolding and over time lost 8% of its value even though it was not really hurt during the crisis. The stock has rebounded from less than $5 and is now pausing but is on a run back to its IPO price, $38 or so. Better still, the underlying business is very, very sound — I focus on fundamentals first, you should too before chasing yield — with two things boding very well for their short and longer-term future.
First, they bought a lot of houses at fire sale prices and you can assume they will be unloading them over time.
Second, merger and acquisition activity is ratcheting up and they will be in the middle of a great many deals going forward given their expertise and their ability to raise capital to get these deals done. If the proposed buy out by Icahn happens, BX will profit handsomely – otherwise they would not be in the mix.
With Blackstone, you get growth and income in one name with a healthy yield of 8.5%. Regardless of how the Dell deal shakes out, Blackstone is now back on Wall Street’s radar, money is flowing in at the $20 price point, the yield is good and the company is in a position to grow, and that means a higher stock price and the possibility of dividend increases in the not too distant future.