Last week,BlackRock Inc.’s (BLK) board of directors approved a 37% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now stands at $1.375 per share compared with the previous amount of $1.00 per share. The revised dividend will be payable on March 23, to shareholders as of the close of business on March 7.
This marks the strength of BlackRock’s business model, reflecting the company’s commitment to return value to shareholders with its strong cash generation capabilities. Prior to this revision, the company increased its dividend by 28% (from 78 cents to $1.00 per share) in February 2010.
Based in New York, BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide with Assets Under Management (AUM) of $3.561 trillion as of December 31, 2010. The organization provides products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes.
We believe that despite active competition in markets, the company has a significant long-term upside potential based on its risk management, advisory and enterprise investment system services to an extensive base of institutional investors.
Earnings Recap
Last month, BlackRock reported fourth-quarter 2010 operating earnings of $3.42 per share, substantially ahead of the Zacks Consensus Estimate of $2.90 and surpassing the prior quarter’s earnings of $2.75 and the prior-year quarter’s earnings of $2.39.
Better-than-expected results were primarily aided by a strong growth in top line, benefits of the Barclays Global Investors (BGI) acquisition and improved equity markets, which were offset partially by higher operating expenses.
Our Take
Though there are concerns related to the sluggish equity market recovery, BlackRock’s businesses – BlackRock Solutions and the advisory business – will continue to be benefited from the growing need of risk management solutions within the financial industry. Moreover, dividend increase reflects BlackRock’s strong cash position and shareholders’ value to the company.
BlackRock currently retains its Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating. Also, considering the fundamentals, we are maintaining an “Outperform” recommendation on the stock. We also maintained an Outperform recommendation on BlackRock’s major competitor – Ameriprise Financial Inc. (AMP).
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BLACKROCK INC (BLK): Free Stock Analysis Report
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