A lot of people think you have to do more to make more. But that’s not necessarily true. Investing in dividend stocks allows you to earn money without having to work for it.
And with the recent market correction, there are a lot of great dividend stocks on sale right now. If you’re looking to earn more money in 2023, here’s why you should consider buying Blackstone (BX 2.19%) and Alexandria Real Estate Equities (ARE 2.21%).
Blackstone has major upside potential
A growing number of wealthy individuals and institutional investor are looking for alternative assets for market-beating returns. These investments, which include things like real estate, high-yield debt, life sciences, and renewable energy, along with countless other industries, not only diversify portfolios but often provide a higher return than traditional investments like bonds or stocks may be able to offer.
The challenging part of alternative assets, however, is that it is a very niche industry. Most individuals and even large investment funds don’t have the connections, buying power, time, or knowledge to invest in these asset classes successfully. This is where alternative asset management companies like Blackstone come in.
Blackstone is one of the largest alternative asset management companies, with $975 billion in assets under management (AUM) at the end of 2022. Despite this, the stock is down 16% in the past year, though the company had one of its best years ever in 2022. Its AUM grew by 11% for the year, while its fee-related earnings increased by 9%.
The company is experiencing record demand for its services and products and healthy performance within multiple funds. I personally see this trend continuing as investors look for new ways to earn returns on their money in a challenging economic environment. So how does this play into you making more money?
Blackstone doesn’t pay set quarterly dividends like most other dividend stocks. Instead, it looks at its recent performance and pays out a dividend based on its earnings and historic yields, which fall between 4% to 5%. The stock’s dividend is extremely well covered. It has plenty of capital on hand to maintain its dividend payments and debt obligations while continuing to invest and grow without worry. Today the stock has about a 5.3% yield based on estimated earnings, but if performance continues in an upward trajectory, investors could earn a lot more if they hold on.
Alexandria Real Estate Equities offers a healthy dividend payout
The office-rental industry has had a tough time recovering from the impacts of the COVID-19 pandemic. The shift to part-time or full-time remote working has led to less demand and increased vacancies, which isn’t a great place to be as an office owner. However, not all industries are feeling the same pressure.
Life sciences, pharmaceuticals, biotech, and healthcare industries can’t adapt to remote work as easily as many others. They need high-quality office space to do research, develop new medicines and technologies, and treat patients. Alexandria Real Estate Equities is an office real estate investment trust (REIT) that serves these industries with roughly 74 million square feet of class-A office properties and medical campuses.
Demand for these properties is booming. Alexandria’s leasing activity in the third quarter of 2022 continued to outperform its historical average, with over 1.7 million square feet of office space leased with rents about 27% higher than the year before. Its net operating income (NOI), an important metric showing a REIT’s profitability, has grown nearly 11% since last year, giving the company ample coverage for its attractive 3% dividend yield.
The REIT has increased its dividend payouts consistently for the past 12 years, equating to a 181% increase in dividends. It also has a healthy balance sheet with no major debt maturities coming due until 2025 and plenty of cash on hand to maintain its impressive growth and keep raising its dividends.
A small investment in these companies could not only generate extra money for you this year, but due to the nature of dividend growth and long-term growth opportunities, it could add up to a lot of passive income in the future, too.
Liz Brumer-Smith has positions in Blackstone. The Motley Fool has positions in and recommends Alexandria Real Estate Equities and Blackstone. The Motley Fool has a disclosure policy.
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