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BlackRock: Strategic Initiatives amid Slowing Alpha Returns

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Part 6
BlackRock: Strategic Initiatives amid Slowing Alpha Returns PART 6 OF 10

BlackRock Shareholder Payouts Are Consistent amid Decent Growth

Shareholder payouts

BlackRock (BLK) has consistently expanded its assets base and, as a result, operating earnings over the past few quarters. The company has attracted flows across categories and offerings, reflecting buoyancy in the market as well as a strong product line. The company is rewarding shareholders through dividends and repurchases. In 2Q17, BlackRock paid dividends of $2.50—growth of 9% on a year-over-year basis—in line with the previous quarter.

BlackRock Shareholder Payouts Are Consistent amid Decent Growth

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The company’s dividend yield at current prices stands at 2.33%, which is higher than the industry average of 2.1%. Competitors have the following yields.

  • State Street (STT): 1.79%
  • JPMorgan Chase (JPM): 2.15%
  • Bank of New York Mellon (BK): 1.79%

Together, these companies make up 2.2% of the SPDR S&P 500 ETF (SPX-INDEX)(SPY).

Stable buybacks

BlackRock has repurchased ~$1.1 billion, which accounts for ~1.58% of the company’s total market capitalization over the past four quarters. In 2Q17, the company continued with its existing program and bought back its own stock for a total of $275 million. This trend is expected to continue in 2H17, and any substantial decline in the stock price could trigger higher repurchases.

On a YoY (year-over-year) basis, BlackRock reduced the weighted-average diluted number of shares to 164.1 million from 166.6 million. Over the past six months, BlackRock stock has risen 15.3% on new long-term flows, higher ETF and debt flows, an introduction of innovative offerings, and high operating margins.

BlackRock’s diversified offerings have helped the company ride out business cycles. They also add assets at regular intervals. The company continues to invest in technology to help investors deploy money and generate returns.

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