High returns for equity
The Blackstone Group L.P. (BX) and other major alternative asset managers started going public in 2007. Blackstone’s equity has returned a compounded annual growth rate of 30% over the past five years. It has paid out substantial dividends with a yield of 5%–7%.
In 2014, Blackstone’s full year distribution to unitholders amounted to $2.12, which was 58% higher than the previous year. In the fourth quarter, the company increased divided to $0.78 compared to $0.44 in the previous quarter.
Blackstone improves realization fee
One of the major factors affecting payouts is the fee from net realization activity, or the portion of total fees earned when investments are sold. Blackstone has improved its realization fee substantially over the last couple of years.
Blackstone’s distributable earnings increased by 64% in 2014 to $3.1 billion backed by realization of $44.6 billion through IPOs (initial public offerings), secondary sales, and distributions for 2014. The highest realization was recorded in the real estate segment, mainly due to unlocking value from the slowdown in the market.
Blackstone’s (BX) stock has performed better than its peers in the alternative management space. These peers include the Carlyle Group (CG), KKR & Co. L.P. (KKR), Apollo Global Management (APO), and T. Rowe Price (TROW). Its peers also include other major players that form part of the Financial Select Sector SPDR Fund (XLF) and the iShares U.S. Financials ETF (IYF).
To know more about Blackstone, read Market Realist’s series The Blackstone Group: Investing with an alternative giant.