BlackRock: A Rock-Solid Stock To Add To Your Dividend Portfolio

BlackRock (NYSE:BLK) has a long growth runway thanks to its large-exposure to passive investments. Moreover, it’s trading at a good value today and offers a secure yield of 3%.

BlackRock is a Long-Running Winner

BLK has been a long-term winner, delivering 15-year total returns of 15.8% per year versus the S&P 500’s 7.4% return in the period. Its 10-year returns of 13.5% per year also won against S&P 500’s 12.9%.

BLK’s earnings can appear a bit bumpy but in reality is slow growth periods occurring after high-growth ones. For example, it had three years of double-digit rate growth followed by a slowdown in 2015 and 2016. Then, high growth resumed in 2017. What’s important is that its long-term growth is intact. For example, from 2007, before the last financial crisis hit, to 2018, the company’s earnings per share increased by 11.5% per year on average.

Dividend

BlackRock’s consistent earnings growth has allowed the stock to begin paying a dividend in 2003. This year marks its 16th consecutive year of dividend growth. BLK’s five- and 10-year dividend growth rates are 11.3% and 15.5%, respectively.

With a payout ratio of ~48%, there’s a big buffer to protect BLK’s dividend, which is currently good for a yield of 3%. Investors can also expect dividend increases in the future to more or less match its earnings growth rate.

Valuation

At ~16.3 times earnings, BLK trades at a modest 10% discount from its long-term normal…

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Disclosure: As of writing, we’re long BLK.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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