Blackstone Group LP (NYSE:BX) stock is up more than 2% in midday trading on Thursday after posting a blowout first quarter that beat both top- and bottom-line estimates.
It’s more of the same for the BX stock price, which has soared over the last year, gaining 35% over that period. But that’s not all there is to love about Blackstone shares: it’s also one fine dividend stock, dishing out 7.4% annually to its lucky investors.
That said, in the wake of its wildly impressive quarter, it’s time to stop being jealous of long-term owners of BX stock and start owning the stock yourself.
With so many clear bullish catalysts working in its favor, the bull case for Blackstone stock isn’t tough to make.
Macro Trends Are Blackstone’s Friends
Measured by its market capitalization, Blackstone Group is the second-largest asset manager in the world: its $47 billion market cap is about 30% smaller than the sprawling BlackRock, Inc. (NYSE:BLK). But measured by a different metric, economic net income, BX is tops in the biz, hauling in $5.6 billion in the last 12 months alone.
CEO Stephen Shwarzman, the company’s co-founder, called BX stock an “earnings machine” on an interview with cable channel CNBC, explaining that, simply put, the company is able to perpetually and intelligently re-invest earnings in new and lucrative opportunities, then turn around and re-invest those earnings in more businesses.
Its a strategy that the greatest investor of all time, Warren Buffett, also followed in building Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) into a financial behemoth. In other words, BX stock is in good company.
The proof is in the pudding, and BX stock enjoyed a heavy dose of proverbial pudding in the first quarter, as revenue soared 66% year-over-year to $2.5 billion, breezing past the consensus estimate of nearly $2.1 billion. The $1.37 per-share in economic profit, which includes unrealized gains from current portfolio positions, also crushed Wall Street’s consensus $1.04 per-share figure.
BX stock is definitively on the right side of macroeconomic trends, ensuring it will be a player to contend with in the world of finance for the forseeable future. Blackstone has its hands in private equity, real estate, hedge funds, and financial advising. Economic net income in its private equity division more than doubled in the first quarter, while its real-estate investments nearly doubled as well.
With real estate still on the mend from its recession-era lows and private equity returning five-year annualized returns near 17%, BX stock offers investors direct access to alternative investments that are typically only available to high net worth individuals and institutional investors. While the S&P 500‘s trailing five-year returns clocking in at an annualized 12% pace doesn’t sound like a huge difference, the magic of compounding makes the outcomes quite palpable: $10,000 invested in the S&P five years ago would be worth $17,643 today, while the same investment in private equity would be worth $21,738.
Blackstone stock’s outperformance affirms a strong trend developing thus far this earnings season: Financials are killing it. JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), and Citigroup Inc (NYSE:C) each independently reported earnings per share beats this week alone.
But neither JPM, WFC nor Citigroup can offer the massive dividends or exposure to high-return private equity markets that BX stock does.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at firstname.lastname@example.org.
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