2022 was a challenging year for alternative asset management company Blackstone (BX 2.79%). The general bear market and rising interest rates weighed on the company as they did many other stocks. In October, Blackstone's private real estate investment trust, BREIT, saw increased redemption requests, which sent investors running. In total, the stock fell 43% in 2022.
Could 2023 be the year Blackstone stock recovers? Let's take a closer look.
NYSE: BX
Key Data Points
The latest numbers
Blackstone reported 2022 results on Jan. 26. The company grew total assets under management (AUM) 11% to $975 billion. This isn't as impressive as 2021's year-over-year jump in AUM of 42%. However, it is still incredibly impressive, considering the size of the company today.
In recent years, Blackstone has benefited from increased demand for its asset management services. Alternative assets -- which can include real estate, public debt, renewable energy, art, and cryptocurrency -- have grown in popularity as wealthy individuals and investment firms look for a market-beating return in a challenging economy.
2021 was a record year for Blackstone, with more money flowing into the company than ever before. Revenue and fee-related earnings (FRE), which make up the bulk of its income, grew tremendously in response. Investors took note of its impressive growth, and over the last three years, its share price has soared by 54%.
However, the company's rate of growth appears to be returning to more normalized levels. 2022 saw an inflow of $226 million from investors compared to $270 million the year prior. Despite this slowing, it's still maintaining healthy earnings. In 2022, FRE was up 9% from 2021, and its total distributable earnings rose by 7%. This gave the company plenty of room to bump its dividend payment slightly; the stock yields around 5% currently.
What 2023 could bring for Blackstone
The stock has already rallied close to 30% since the start of 2023. Its latest earnings report helped eased investors' concerns, but many also perhaps realized the BREIT sell-off was likely an overreaction. The company has continuously delivered market-beating returns over the past three-, five-, 10-, and 15-year periods, building confidence in it over the long term.
BX Total Return Level data by YCharts
And I'm not worried about the future as Blackstone is well versed in investing in rocky markets. It went public in March 2007, just before the Great Recession, survived, and thrived.
Its financial profile is strong today, with $18 billion in cash and net investments, which would be enough to pay off all of its debt and still have nearly $8 billion left over. It boasts an A+ credit rating from both major rating agencies and has a $187 billion stockpile of "dry powder capital" ready for opportunistic investments in 2023.
Since the company invests in a wide range of alternative assets, there's no shortage of opportunities for putting money to work this year. It announced it's gearing up for expansion within its private credit business and continues to make advantageous moves for its real estate portfolio.
I bought shares in Blackstone during the sell-off because I believed it was simply a matter of time before the stock recovered. Its flush financial position, proven management skills, and high-demand services make it one of my favorite stocks to own today, and I remain bullish on its path to recovery in 2023. Investors looking for a solid dividend stock that could deliver fantastic growth should consider adding Blackstone to their portfolio.
