And with the recent market correction, there are many excellent dividend stocks on sale right now. If you're looking to make more money in 2023, here's why you should consider buying. Black Stone (BX 2,19%) and Alexandria Real Estate Actions (THEY ARE 2,21%).
Blackstone has great potential for appreciation
A growing number of wealthy individuals and institutional investors are seeking alternative assets for market-beating returns. These investments, which include real estate, high-yield debt, life sciences, and renewable energy, along with numerous other sectors, not only diversify portfolios but also often provide higher returns than traditional investments like bonds or stocks.
The tricky part about alternative assets, however, is that it's a very niche industry. Most individuals and even large investment funds lack the connections, purchasing power, time, or expertise to successfully invest in these asset classes. This is where alternative asset management firms like Blackstone come into play.
Blackstone is one of the largest alternative asset management firms, with $ 975 billion in assets under management (AUM) at the end of 2022. Despite this, the stock is down 16% from last year, despite the firm having one of its best years ever in 2022. Its AUM grew 11% YTD, while its fee-related earnings increased 9%.
The company is seeing record demand for its services and products and strong performance across several funds. Personally, I see this trend continuing as investors seek new ways to earn returns on their money in a challenging economic environment. So, how does this contribute to making more money?
Blackstone doesn't pay a fixed quarterly dividend like most other dividend stocks. Instead, it analyzes its recent performance and pays a dividend based on its historical earnings and returns, which range from 4% to 5%. The stock's dividend is extremely well covered. It has plenty of available capital to maintain its dividend payments and debt obligations while continuing to invest and grow without worry. Currently, the stock is yielding about 5.3% based on estimated earnings, but if performance continues on an upward trajectory, investors could earn significantly more if they hold on.
Alexandria Real Estate Equities offers a good dividend
The office leasing industry has struggled to recover from the impacts of the COVID-19 pandemic. The shift to part-time and full-time remote work has led to lower demand and increased vacancies, which isn't a good place to be as an office owner. However, not all sectors are feeling the same pressure.
The life sciences, pharmaceutical, biotechnology, and healthcare industries cannot adapt to remote work as easily as many others. They require high-quality office space to conduct research, develop new drugs and technologies, and treat patients. Alexandria Real Estate Equities is an office real estate investment trust (REIT) serving these industries with approximately 74 million square feet of Class A office real estate and medical campuses.
Demand for these properties is growing. Alexandria's leasing activity in Q3 2022 continued to outpace its historical average, with over 1.7 million square feet of office space leased at rents approximately 27% higher than a year earlier. Its net operating income (NOI), a key metric that reflects a REIT's profitability, grew nearly 11% year-over-year, providing the company with ample coverage for its attractive 3% dividend yield.
The REIT has steadily increased its dividend payments over the past 12 years, totaling a 181% dividend increase. It also has a healthy balance sheet, with no major debt maturities until 2025, and plenty of cash on hand to maintain its impressive growth and continue increasing its dividend.
A small investment in these companies can not only generate extra money for you this year, but due to the nature of dividend growth and long-term growth opportunities, it can also generate a very large passive income in the future.
Liz Brumer-Smith holds positions at Blackstone. The Motley Fool holds positions in and advises Alexandria Real Estate Equities and Blackstone. The Motley Fool has a disclosure policy.
