Just about any of the most-famous billionaire investors will tell you not to think of investing as buying stocks but buying businesses. My top name for 2024 is BlackRock (BLK), the asset management firm founded in 1988 and based in New York, advises John Dobosz, editor of Forbes Dividend Investor.
The benefit of buying shares in a variety of companies is that it allows you to access the financial returns associated with a business without needing to possess the means of production or coming up with the required capital to build such an enterprise yourself. This allows talented people to focus on what they do best, which in turn promotes deeper degrees of expertise and ultimately higher profits.
BLK has grown over the past 35 years to become the world’s largest asset management company, with $8.6 trillion in total assets under management at the end of 2022. Headed up by famed one-time billionaire Larry Fink as chairman and CEO, BlackRock provides investment management, risk management, and advisory services for institutional and retail clients around the world.
Last year, 81% of $17.9 billion in total revenue came from BlackRock’s advisory business. Two-thirds of revenue derives from North America, and 30% from Europe. One of the big trends that BlackRock has capitalized on is the growing popularity of exchange-traded funds. In 2009, it acquired the iShares collection of ETFs from Barclays.
Wall Street expects BlackRock’s revenue to grow 7.4% to $19.1 billion in 2024, with earnings up 2.4% to $37.68 per share. Free cash flow over the past month totaled $25.05 per share. At the current quarterly rate of $5 per share, dividends total 53% of expected earnings and 80% of free cash flow.
Here’s some comforting history if you’re worried about your dividends keeping up with inflation: Since it paid its first dividend of $0.20 in 2003, BlackRock has hiked the quarterly payout 17.5% annually over the past two decades.
It’s a notable sign of respect if you’re in the investment business and you attract enough interest from peers that they invest in your company. Ken Fisher’s Fisher Asset Management has been accumulating shares since 2021 and now owns a $1.97 billion stake. Israel Englander’s Millennium Management has boosted its ownership in BlackRock steadily over the past year, and owned 305,000 shares worth $277 million as of the fourth quarter of 2023.
