The term “alternative assets” applies to non-publicly traded assets such as privately-held companies, venture capital, real estate and commodities, explains Harry Domash, income specialist and editor of Dividend Detective.
Blue Owl Capital (OWL) was formed via a December 2020 merger of two alternative asset investors, Owl Rock Capital Group and Dyal Capital Partners.
After its May 2021 IPO, Blue Owl then acquired two more alternative asset managers, Oak Street Capital in October 2021 and Ascentium Group in December 2021. Although a combined corporation, the original four companies still operate more or less independently.
Blue Owl is in fast growth mode. September quarter AUM (assets under management) which totaled $132 billion, were up 87% vs. year-ago. Revenues soared 107% to $371 million. I’ve found that, share prices track annual earnings per share (EPS) closer than any other single factor.
For next year, analysts are forecasting 30% EPS growth, powered by a 34% jump in revenues. Why such spectacular growth? According to a recent analyst report, over 80% of Blue Owl’s assets under management can be classified as “permanent capital.” What’s that? Permanent capital does not have to be paid back at any predetermined date, if at all.
Shareholders can only withdraw their investment by selling their shares to someone else. That’s the best kind of cash to have. Why? Blue Owl doesn’t have to be continuously procuring new cash to replace cash coming due to be repaid. For comparison, only about 20% of Blackstone’s net asset value qualifies as permanent.
Blue Owl paid its first quarterly dividend, $0.04 per share, in August 2021. Since then, it has raised its quarterly payout by $0.01/per share in most quarters. Its most recent payout, $0.12 per share in November, was 33% above year-ago.
According to analysts, that trend will continue. They’re expecting quarterly dividends to average $0.15 per share next year and $0.18 in 2024. To put those numbers in perspective, that’s around 25% dividend growth next year and 20% dividend growth in 2024.
