Since going public in 1999, the asset management firm known as BlackRock Inc. (NYSE:BLK) has been the best investment of the 21st century.
Yes, it’s better than Amazon.com, Inc. (NASDAQ:AMZN), a lot better. It’s up 2,670% in that time, and it has been paying dividends in a rising stream since 2003. Payouts started at 20 cents per share and now bring in $2.50 each quarter. An income investor who got in on the 1999 IPO, paying $14 per share, is now collecting $10 per share in dividends each year.
Some of the capital gains are a trick of the light. BlackRock did not participate in the “dot-bomb,” the collapse of Internet stocks that began in early 2000 after Time Warner Inc (NYSE:TWX) gave AOL 60% of its equity in a merger. BlackRock doubled in value that year.
If you start calculating after the dot-bomb wreckage cleared, BlackRock is up “only” 1,000%, against a nearly 5,400% gain for Amazon during that time. Alphabet Inc (NASDAQ:GOOGL) has also outpaced it since going public in 2004.
The point is that with few exceptions, like the 2008 stock market collapse, the value of BLK stock has consistently increased. And, even during that crisis — where its market cap was cut in half and other companies collapsed completely — BlackRock did not cut that dividend.
America’s Best Banker?
CEO and co-founder Larry Fink is not often mentioned in the same breath as bankers like Jamie Dimon of JPMorgan Chase & Co. (NYSE:JPM) or Lloyd Blankfein of Goldman Sachs Group Inc (NYSE:GS); he just does better for his investors.
BlackRock was founded in 1988 with operating capital from Pete Peterson of the Blackstone Group, from which it separated in 1995 after a dispute with Stephen Schwarzmann, orchestrated with PNC Financial Services Group Inc (NYSE:PNC), whose investment arm came into BlackRock in 1998. BLK went public a year later at $14 per share.
Since then, Fink has gone from strength to strength. BlackRock was hired to clean up the mess of the 2008 meltdown. BlackRock Solutions unwound the toxic mortgage assets. Plus, the same year it was hired for that job (2009), BlackRock acquired Barclays Global Investors and its iShares franchise.
BlackRock’s tech assets include Aladdin, an investment system from BlackRock Solutions, and iRetire, a retirement investment framework offered by other financial advisors.
Hedge in the Age of Trump
As BlackRock has grown, it has developed a knack for taking deals others wouldn’t even consider — and making them work.
Right now, for instance, BlackRock is spending $500 million renovating the Willis (nee Sears) Tower in Chicago. In 2015, BLK bought the 108-story landmark, the world’s tallest building when completed in 1973, for $1.3 billion.