Recent Buy – BlackRock (BLK)

It looks like the volatility in the market is back. Concerns over durability of trade talks between China and and the US, together with dimming outlook for the global economy sent the markets down during the last week. We will see if this is the beginning of a serious trouble or just another temporary dip. I decided to keep my strategy simple and keep investing when I have some capital, despite the frightening headlines in media.

Financial sector was one of the biggest losers last week and I was thinking for a while now to purchase some shares of a company in this sector. Several names were in my radar – Prudential Financial (PRU), Toronto Dominion (TD), Bank of Nova Scotia (BNS), BlackRock (BLK). I decided to go with the latter one, despite it having the lowest dividend yield from the list. What I liked about this company was the streak of dividend raises, fairly modest payout ratio and small debt to equity ratio.

Brief description about the company:

BlackRock, Inc. (BlackRock), incorporated on February 13, 2006, is an investment management company. BlackRock provides a range of investment and risk management services to institutional and retail clients worldwide. Its diverse platform of active (alpha) and index (beta) investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. The Company’s products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs), separate accounts, collective investment funds and other pooled investment vehicles.

I guess most of us heard about iShares ETFs, so it feels good to own a piece of company which is behind it.

Purchase Summary

On the 7th of December, I bought 3 shares of BLK for $400/share + $7 commissions for a total of $1207.00:

Some facts about the company at my purchase price:

  • Dividend yield: 3.13%;
  • Payout ratio: 45.10%;
  • Dividend raise streak: 9 years;
  • P/E (TTM): 11.46;
  • Debt to Equity ratio: 0.16.

It turns out that I could have got it for a better price if I waited more, as the price decreased to ~$393 at the end of the day. On the other hand, it was at $408 at one point during the day as well, so I got it somewhere in the middle and $400 was my target price for this company for a couple of months now.

This purchase will increase my projected annual dividend income (PADI) by $31.92 ($12.52 * 3 – 15% tax).

It also highlights another milestone for my portfolio. My stocks portfolio has finally surpassed €10k, just barely. After the small fall yesterday, my stocks portfolio stands at €10070.52 so it’s not certain that it will stay above this mark in the future but I treat it as a big accomplishment πŸ™‚

What do you think about this purchase? Do you have BlackRock in your portfolio? Do you think I should have waited more for the price to decline? I would love to read your thoughts!

15 thoughts on “Recent Buy – BlackRock (BLK)

  1. I don’t know the company that well, but you’re buying when the price is at a 17-18 month low. We’ll have to wait and see what happens from here on, but buying during ‘market down’ and holding on to your shares can be a good long term strategy. Great to see your dividend income is on the rise!

    1. Hi Marc,
      Yes, the price of BlackRock declined by quite a bit during the last year. So far, the strategy of buying low works out most of the time. Anyway, if the company keeps paying/raising their dividend, I will be happy to hold on to them whatever the price πŸ™‚

        1. I like the cash flow. I am hoping to cover part of my expenses by dividends one day. I don’t like thinking about my investments in terms of capital gain as it’s usually hard to tell when is the best time to enter/leave the position, so I like holding them long term πŸ™‚

          1. Sounds like a good strategy. That’s one of the reasons I also started investing in P2P lending. I do like using part of my portfolio/funds for (somewhat aggressive) expansion (via capital gain increases), but when I get closer to financial independence my risk tolerance will probably get lower…making me shift focus to cash flow.

  2. That’s a solid buy, BI. Congrats.
    I’ve initiated a position in mid November. As the price came back to my cost basis, I really considering to buy more of this industry leader.
    Cheers
    Alex

    1. Hey Alex,
      That’s nice! I just saw your stocks watchlist for December and can see that BLK made it there as well. We will see how it turns out. If a recession hits, it could be one of the stocks that would go down by a lot, I guess, but I cannot predict when/if that happens so I just keep adding to attractive positions as much as I can πŸ™‚

  3. Nice buy. Looks like BLK and ITW are two solid names trading at much better levels these days. Of course, there are other more “controversial” names to choose from trading at much lower levels too. Names like MO, T, KHC, GIS and the like if you dare… Thanks for sharing.

    1. Hi DivHut,
      Thanks for the comment! I like your other mentions as well. I started considering MO recently, while KHC was in one of my earlier watchlists.

  4. I’m a fan of the buy and just added to my position in BLK today. They’ve had some pretty big price swings lately and through patience I was able to grab some at my price target today, and I think you got a good price too.

    1. Hi DivvyDad,
      Thanks for the comment! Yeah, the price is really swinging a lot lately. I could have got it for a better price if I was more patient πŸ™‚

  5. I like the company and the price you paid, BI. I think you’ll be happy with BLK over the long-term. I agree there may be some more downside in the near-term, but that should not be a concern considering your planned holding period. Congrats on passing the €10K mark in portfolio value as well! Keep up your outstanding efforts.

    1. Hi ED,
      Thanks for the comment! If I remember correctly, you also bought some of their shares a couple of months ago. Let’s hope it will serve us well πŸ™‚

  6. Wow that is some heavy investments lately you have there BI. With such investment scale you will surpass me with dividend income in no time πŸ™‚ Financial sector you say. Hmm a good tought. I was looking at CSCO myself, but the price keeps on holding around 45$ while it was just ~30$ a year ago. Maybe it worth looking at some of banks of other financial comapnies.

    1. Hey P2035,
      I think Financials sector is quite risky, as it may be the first to go down if a recession hits. But as I mentioned before, we never know when it happens so I would rather be more diversified and have some exposure to each sector πŸ™‚ So I just try to invest as much as I can to companies that look undervalued to me at the moment.

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