Blackstone Group LP (NYSE:BX) is one of the market’s rare winners this year, with a modest 0.3% return since Jan. 1. On top of that, Blackstone stock’s total return is even more attractive when you factor in its juicy 8.2% dividend yield.
So what makes BX stock such a strong bet?
If you’re unfamiliar, the Blackstone Group is a global asset management company. In addition to offering mutual funds and hedge fund services, BX has a very successful private-equity arm that snaps up value plays and squeezes cash out of them at a steady rate.
Some of the investments in the Blackstone portfolio include a in footwear company Crocs (CROX) and a of natural gas master limited partnership Cheniere Energy (LNG). Most recently, Blackstone made a of
BioMed Realty Trust (BMR), a company specializing in laboratory and medical office space, for over $4.8 billion.
While these plays seem disparate, the key factor they all share is the potential for reliable revenue and the ability to provide consistent cash flows — a crucial part of supporting Blackstone’s big dividend yield.
Take a look at this chart showing the last few years of BX stock financials (), and you’ll see that the company is consistently growing revenue and margins at an impressive rate.
Now, there’s always a chance that Blackstone could stumble if its underlying investments stop performing as well as they have. However, with a five year return of 160% — and that’s share appreciation alone, mind you — investors have plenty of history to prove that Blackstone has staying power.
Now, obviously a market meltdown will be painful in the short term for many investors. But BX has the benefit of being able to make bargain-priced acquisitions if asset prices decline, which is a bit of a hedge against current volatility if you’re worried about a downturn.
So when you add up the big dividend and the big deal-making potential, it seems that Blackstone is one of the safest bets out there for long-term investors.
is the editor of InvestorPlace.com and the author of . As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via .
