Could BlackRock’s Payouts Rise in 2018 on Repurchases, Operations?
Asset managers (VFH) are rewarding shareholders through dividends and repurchases amid improving operating performance and strong operating margins. Equity markets are expected to see subdued expansion as a result. Asset managers are improving return on equity by engaging in continual repurchases. BlackRock (BLK) paid out dividends of $2.50 per share, a rise of 9% on a YoY (year-over-year) basis.
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The company’s dividend yield at current prices stood at ~2%, which is higher than the industry average of 1.9%. Competitors have the following yields:
Together, these companies make up 2.1% of the SPDR S&P 500 ETF (SPX-INDEX) (SPY).
Buybacks amid rising prices
BlackRock has continued to utilize $275 million for buybacks every quarter over the past six quarters. It has reduced the weighted number of shares to 163.8 million in 3Q17 from 166.3 million. The buyback has continued amid rising stock prices, reflecting management’s confidence in the overall operations of the company. BlackRock is expected to extend and expand its repurchase program in 2018 since operating cash flows are expected to be sizable over the next few quarters.
Over the past six months, BlackRock stock has risen 21.1% on inflows across offerings, ETF dominance, operating margins, and fund performance. The company has outperformed its peers and is now managing $6 trillion in total assets under management across equity and debt offerings inside and outside the United States.