Blackstone (BX +1.37%) endured a tumultuous year in 2022. Investors were spooked by news that it saw a surge in redemptions at its non-traded real estate investment trust (REIT), causing concerns about that core product. Those worries weighed heavily on Blackstone stock, which shed more than 40% of its value last year.
However, as the company's recently reported fourth-quarter results show, investors have no reason to fear. The company was able to declare a $0.91 per share dividend for the quarter, slightly higher than the previous payment. Dividends paid over the past year give it a 5.5% yield at the recent share price, significantly above the S&P 500's 1.7% yield.
NYSE: BX
Key Data Points
The flood of inflows continued
Blackstone ended 2022 with nearly $975 billion of total assets under management (AUM), up 11% year over year. That included $718.4 million of fee-earning AUM, which also rose 11% from the prior year.
That enabled the alternative-asset management behemoth to generate $1.1 billion, or $0.88 per share, of fee-related earnings in the period. It brought the 2022 total to $4.4 billion, or $3.65 per share, up 9% from the prior year.
Meanwhile, total distributable earnings -- which include fee-related income, net performance revenue, and investment income -- grew by 7% last year to $6.6 billion, or $5.17 per share. The company recorded $1.07 per share of total distributable earnings in the fourth quarter, which beat the analysts' consensus estimate of $0.95 per share.
Investors poured $43.1 billion into Blackstone's funds during the quarter, bringing the 2022 total to $226 billion. Of note, Blackstone's non-traded REIT, known as BREIT, raised $2 billion of capital from investors in the period. That doesn't include the $4.5 billion investment by UC Investments, which it recently upsized by $500 million. BREIT has also already raised $400 million from other investors this year, which isn't in that total.
A mountain of dry powder
The massive inflows into Blackstone's funds give it an enormous amount of dry powder to make investments:
Image source: Blackstone investor relations presentation.
The company entered 2023 with almost $187 billion across its various strategies to deploy on behalf of clients into new investments. The bulk of that money is in its private equity funds, where the company has been very active.
It recently closed the acquisition of Esdec Solar Group, a global leader in rooftop solar mounting systems. Meanwhile, it agreed to buy a majority stake in Emerson Electric's (EMR 2.10%) climate technologies business, valuing that entity at $14 billion.
The latter deal gave Emerson cash to invest in its growth while giving Blackstone's investors control of a business it intends to take to the next stage to drive outsize returns. Emerson will benefit from that growth via its retained share, which it eventually hopes to sell at an even higher value.
Given the current macroeconomic backdrop, Blackstone should have even more opportunities to make attractive investments. Sinking stock prices have driven down valuations, while rising interest rates have made it more expensive for companies to access capital.
That could give Blackstone more opportunities to partner with companies like Emerson to provide them with the money they need to accelerate growth. Those deals could set its funds up to earn outsize returns that would eventually flow to Blackstone's bottom line through performance revenue.
Lastly, it's worth pointing out the significant dry powder across Blackstone's real estate funds, including BREIT. That gives it the capital to acquire real estate across its various strategies. These investments should grow value for its fund investors in the coming years while earning Blackstone fees and performance revenue.
Well positioned for whatever may come
Blackstone delivered solid results last quarter. Investors continue to pour more money into its funds, including BREIT, driving growth in fee-related earnings.
Because of that, the company has lots of dry power to continue making investments in what could be a ripe environment this year, given the economic and interest rate backdrop. That capital positions Blackstone to continue delivering attractive returns for its investors, which should yield higher performance revenue in the future.
This outlook suggests Blackstone can continue growing value for its shareholders, including paying a sizable dividend. With shares still down sharply, it looks like a compelling buy right now.
