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BlackRock Shareholder Payouts Rise amid Strong Growth

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Shareholder payouts can rise

Tax rate cuts and buoyant equity markets can propel shareholder payouts from asset managers (VFH) in 2018. The previous year witnessed consistent repurchases in order to improve return on equity for shareholders. Dividends can also rise at a faster pace in 2018.

BlackRock’s (BLK) board approved a 15.0% increase in quarterly dividends to $2.88 payable in March 2018. In 4Q17, BlackRock paid out $2.50, compared to $2.29 in 4Q16. At $2.88, BlackRock’s annualized dividend yield stood at 2.1%. Its competitors had following yields:

  • State Street Advisors (STT): 1.6%
  • Bank of New York Mellon (BK): 1.7%
  • J.P. Morgan (JPM): 2.0%

Together, these companies comprise 2.4% of the SPDR S&P 500 ETF (SPX-INDEX) (SPY).

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Consistent repurchases

BlackRock (BLK) has utilized $275.0 million for buybacks over each of the last seven quarters. The repurchases have led to a decline in a weighted number of shares to 163.8 million in 4Q17 from 165.9 million in 4Q16.

BlackRock has continued its buyback program amid higher stock prices, as the company reaps the benefit of rising indexes. The company is looking to improve its return on equity for its shareholders. However, there is no update on an enhancement of the current repurchase program as has been the case with dividends.

Over the past six months, BlackRock stock has risen 28.4% on a dominant position in ETFs, varied product offerings, global positioning, and retail and institutional flows. The company is garnering assets at a faster pace, primarily due to its operating performance and technology-backed solutions.

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