KKR & Co. L.P. (KKR), The Blackstone Group L.P. (BX): Two Strong Dividend-Paying Companies With Upward Potential

The Oracle of Omaha is right.

Given their business models, KKR and The Blackstone Group L.P. (NYSE:BX) are required to hold large amounts of cash or have quick access to it. However, the latter option infers that they would obtain excessive amounts of debt and leverage in order to operate — not ideal for most investors’ risk-reward pendulum. As evidenced below, both private equity firms boast a strong balance sheet, especially regarding book value per share.

Metric	KKR	Blackstone
Total Cash	$1.34*	$888**
Cash per Share	$4.81	$1.58
Book Value per Share	$8.23	$9.81
Operating Cash Flow	$5.8*	$1.58*

*Data in billions. **Data in millions.

Additionally, their operating cash flow shows they are liquid, enabling them to quickly invest in an opportunity that can generate excessive returns.

The icing on the cake
KKR and Blackstone manage their operations and cash well — two signs of well-run businesses. But, they also offer phenomenal value through their dividend payments. As seen below, The Blackstone Group L.P. (NYSE:BX) and KKR’s dividend yields exceed the mean dividend yield of the S&P 500 stocks by 110% and 340%, respectively. (S&P 500 data is from investment analytics firm FactSet.)

Metric	KKR	Blackstone	S&P 500 Stocks
Dividend Yield	8.80%	4.20%	2%*

*S&P 500 Aggregate Dividend Yield.

However, investors must beware the large fluctuations that can sometimes occur within the private equity industry. The below chart shows how dividend payments, though still high when compared to the S&P 500, changed by quarter.

BX Dividend Yield (TTM) data by YCharts.

Regardless, both KKR & Co. L.P. (NYSE:KKR) and Blackstone offer above average payments. Interestingly, as a worst-case scenario, The Blackstone Group L.P. (NYSE:BX) has committed to paying a $0.12 dividend to investors no matter the market condition. Given its current price, this would be a 0.55% yield — still higher than many other growth stocks.

Bottom line
KKR and The Blackstone Group L.P. (NYSE:BX) are well-managed companies that generate value on several fronts. Whether for their growth potential, dividend payments, or both, investors should consider adding these companies to their portfolios.

The article 2 Strong Dividend-Paying Companies With Upward Potential originally appeared on Fool.com.

Brendan Marasco has no position in any stocks mentioned. The Motley Fool owns shares of General Electri.. 

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