Earlier this week, BlackRock (BLK) reported record fourth-quarter and full-year earnings results as the world’s largest asset manager continued to fire on all cylinders, reaching an eye-watering $11.6 trillion in assets under management (AUM) during Q4 2024, with BlackRock chief Larry Fink telling clients the asset manager is doing it “your way.”
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Given the strong momentum, I’m bullish on BlackRock based on its continued growth in AUM, undemanding valuation, above-average dividend yield, and stellar dividend growth. With added intrigue, I see it as a relatively derisked option for gaining exposure to the substantial upside in Bitcoin ($BTC-USD), as well as other politically-related cryptos such as Ripple ($XRP-USD), given BLK’s legitimized investment into the cryptocurrency industry via crypto ETFs. Furthermore, on average, market analysts see BLK as a Strong Buy, ascribing a potential upside of 17% over the next twelve months.
The Rich Get Richer
The aphorism of ‘the rich getting richer’ seems appropriate when thinking of BlackRock. Already the world’s largest asset manager, the money-managing titan expanded its AUM — the holy grail of money management — by 21% on the back of rising stock prices and frothy private markets. The company generated $281.4 billion in net inflows during the quarter (up from $95.6 billion last year), bringing its 2024 total to a record $641 billion. The increase benefits BlackRock and its shareholders as it represents more assets on which the company can charge management fees. As such, the company’s profits also increased by an impressive 21% year on year.
BlackRock also surpassed the $20 billion mark in revenue for the year, which increased 14% from 2023.
What Exactly Does BlackRock Do?
The asset manager invests in small, medium, and large businesses that ultimately go on to drive local and international markets worldwide. More specifically, BlackRock invests in companies that power cities, while in finance, it invests in innovative financial technology ventures.
BLK Dominates the Crypto Landscape
A fundamental pillar of my bullish view is that BlackRock has rapidly become a juggernaut in the world of ETFs. Despite the cryptosphere struggling to obtain validation and regulatory approval to the same degree as traditional assets, BlackRock has entered the field and established strong profit margins while mopping up the competition. From the sum total of $281.4 billion in net inflows, the majority share ($142.6 billion) went into ETFs.
Perhaps nothing highlights how dominant of a business BlackRock is like the massive success its groundbreaking crypto ETFs enjoyed in 2024. Quite possibly, BlackRock’s embrace of Bitcoin (and Ethereum (ETH-USD)) gave these assets a newfound level of credibility with institutional investors simply because of BlackRock’s indomitable reputation, and many feel BlackRock’s involvement is what pushed the SEC to eventually approve spot Bitcoin ETFs.
While many providers launched similar Bitcoin ETFs, BlackRock’s iShares Bitcoin Trust (IBIT) has proved the most successful, bringing in over $50 billion in AUM in less than a year. IBIT attracted $10 billion in AUM faster than any ETF in history, reaching this milestone in just 37 trading days. It is also the fastest ETF to ever hit $50 billion in assets. The ETF is up more than 144% over the past year.
Clearly, the success of IBIT highlights the power of the BlackRock machine, not only in technology or financial muscle but also in sales and marketing. It is a good example of a dominant market player leveraging its size, scale, and strong reputation to succeed in a novel market boasting spare capacity with little to no competition. I also like that BlackRock didn’t simply sit on its laurels as the world’s number one asset manager. It led from the front on Bitcoin ETFs and was handsomely rewarded. IBIT charges an expense ratio of 0.25%, so with north of $50 billion in AUM, I expect it to become a significant cash cow for BlackRock going forward.
Overall, Ethereum ETFs have not yet found the same traction in the market as its Bitcoin counterpart, but BlackRock is the leader here as well, as its iShares Ethereum Trust ETF (ETHA) is by far the largest of this cohort with $3.9 billion in AUM.
During the incoming Trump administration, many observers expect regulators to treat crypto more favorably, which could pave the way for additional crypto ETFs such as Solana (SOL-USD) ETFs, which would be a significant opportunity for BlackRock to further capitalize on its success in this market segment.
Blackrock’s Fair Valuation Adds to Its Appeal
While BlackRock is a powerhouse, shares do not command a premium valuation, making the stock attractive.
With 2024 now in the rearview mirror, the stock trades at 21.3x forward earnings, so despite the stock trading at close to all-time highs, there is still value for investors looking to board the BLK train. At over a thousand dollars, the stock isn’t cheap but does represent value relative to the broader market, as the S&P 500 (SPX) currently trades at 23.4x forward earnings while the Dow trades at 24.9x. Plus, with analyst consensus estimates calling for earnings per share to rise from $47.62 in 2025 to $53.98 in 2026, the stock looks even cheaper at 18.8x these 2026 estimates. Despite BLK’s lofty elevations, it offers an undervalued below-market multiple despite firing on all cylinders. The very definition of a value buy, in my book.
Dividend Growth Courtesy of the BlackRock Way
As an added bonus, BlackRock has also snuck into the conversation as a leading dividend stock.
The company’s stock yields 2.0%, which may not sound like a game-changer for income investors but is still meaningfully higher than the 1.26% offered by the S&P 500.
Where BlackRock really shines is as a consistent dividend stock. The company has made dividend payments for the past 21 years and has grown its dividend payout yearly for the past 15 years. If that wasn’t enough, the financial giant has grown its dividend payout at a solid 9.1% compound annual growth rate over the past five years. BlackRock also maintains a conservative dividend payout ratio of under 50%.
In recent comments, BLK’s CFO Martin Small said that the company is seeking Board approval to increase its dividend for the first quarter of 2025. As BlackRock continues to grow earnings and expands into new markets before the regulators have even drafted a plan, I expect it to continue to increase this dividend payout for many years to come.
BlackRock’s returns to shareholders aren’t limited to dividends. The company has also rewarded shareholders with share repurchases, buying back $375 million in shares during the fourth quarter and $1.6 billion in 2024. Expect more of the same going forward — Mr. Small says that BlackRock is targeting a similar $1.5 billion in 2025.
Is BlackRock a Good Stock to Buy?
According to Wall Street analysts, BLK carries a Strong Buy rating based on 13 Buys, two Holds, and zero Sell ratings over the past three months. Additionally, BLK carries an average price target of $1,176 per share, which implies around 17% upside potential from current levels over the next twelve months.
The Final Verdict
BlackRock is a juggernaut with glowing metrics but with a share price that looks prohibitively expensive. It needn’t be. Despite the frothy conditions, the powerhouse stock remains relatively undervalued. I’m bullish on BlackRock based on its continued AUM growth, dominant position in crypto ETFs, below-average valuation, above-average dividend yield with strong dividend growth, and share buybacks. This behemoth cannot put a foot wrong, which makes it a solid addition to any long-term fintech-leaning portfolio.
