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.
For BlackRock, that’s a small deal, actually. It’s currently buying First Reserve Energy Infrastructure Funds, a $3.7 billion owner of income-producing energy projects like mid-stream pipelines, grabbing for Trump’s infrastructure money with both hands.
Fink is skeptical of the Trump rally, and of the President’s plans for the dollar. Fink still loves the Mexican peso and is worried about the future of the global economy in the age of Trump. But, BlackRock keeps politics and business separate, its response to the travel ban mainly a letter to employees.
BlackRock’s ETF business has more than $1 trillion in assets. It considers Russia a buy, but is skeptical of Brexit, even while former UK Chancellor of the Exchequer George Osborne joins BLK as an adviser.
During the fourth quarter of 2016, BlackRock again beat analyst estimates, earning $852 million, $5.14 per share, on revenue of $2.89 billion. It brought approximately one-third of revenue to the net income line because most of its money came in the form of investment advisory fees, from administration fees and securities lending.
Bottom Line for BlackRock Stock
When BlackRock plunges into a stock, it can hold up, despite real business pressures. An example is GoPro Inc (NASDAQ:GPRO) — without BlackRock’s investment, the company might be worthless now. Similarly, BLK’s growing investment in First Data Corp (NYSE:FDC), the transaction processing company, also made headlines.
BlackRock operates passively, and its growth — considering the sheer size of its investment portfolio — concerns some reporters and regulators. Don’t let yourself be counted among them. This is one of those stocks which, like Apple Inc. (NASDAQ:AAPL), you can buy, put away and generally ignore, while still remaining confident of solid returns. BLK stock has a 20-year track record of stellar performance, and the founders remain at their desks.
Dana Blankenhorn is a financial and technology journalist. He is the author of the sci-fi novella Into the Cloud, available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL, but wishes he’d discovered BLK years ago.