Oaktree Capital Group: 5% Dividend Yield And Growing Assets

Investors looking for high yield in the financial sector typically have to look beyond the big banks and insurance companies.

While there are several financial stocks represented in the Dividend Achievers, they mostly have dividend yields in the 2%-3% range.

The Dividend Achievers includes 265 stocks that have raised their dividends for at least 10 years in a row.

Oaktree Capital Group (OAK) is not on this list, because it has an uneven dividend history. It pays a variable distribution, which fluctuates depending on the performance of the business.

But, it has a high dividend yield of 5.2%, which is well above the financial sector average yield.

This article will discuss Oaktree’s business model and future growth prospects.

Business Overview

Oaktree is an asset management firm, with a focus on alternative investments. It seeks a superior return with a lower level of risk than standard investment options can generate.

Some of the asset classes the firm invests in include corporate debt, distressed debt, real estate, and more.

Source: 2017 Quarterly Investor Presentation, page 3

Oaktree’s fund types include both open-end and closed-end, and evergreen funds. The company has offices in 18 cities around the world.

At the end of 2016, the company held $101 billion in assets under management.

It has a diverse client base, which includes pension funds, insurance companies, corporations, endowments, and high net worth individuals.

It also has a 20% ownership stake in DoubleLine Capital.

Oaktree’s funds have performed well over the past several years, which has driven growth of assets under management.

Source: 2017 Quarterly Investor Presentation, page 5

For example, AUM rose 4.1% last year, and grew 35% over the past five years.

Oaktree is structured as a partnership. This means its investors are considered unitholders, and the company pays a distribution.