Private Markets Investing With 10% Dividend Growth

There’s a whole world of investing most people don’t even know about.

It’s more than just stocks and bonds!

Investing in art, commodities, derivatives, private companies, and real estate are a few other areas investors can park some cash.

It’s called alternative investing, and some investment firms specialize in matching investors with some different places to put their money.

But here’s the bad news… you need a lot of cash to work with some of these firms.

However, it’s not all bad news because some of these investment firms trade on the stock market.

And one of them pays a nice dividend.

Hamilton Lane (ticker: HLNE) is one of the largest alternative investment firms around, managing and advising over $1 trillion in assets.

Specifically, the firm helps its clients with private market investing, which includes private equity, venture capital, and real estate.

Here’s how it works.

Hamilton Lane acts as a portfolio manager for investors.

But instead of buying stocks, the company invests in private companies, startups, or real estate.

Hamilton Lane also advises clients on private market investing by analyzing investments and recommending picks to meet their investing goals.

It’s a lot of work, but Hamilton Lane is charging a ton in fees to its clients.

And those fees are being passed to investors as dividends.

Hamilton Lane just raised its dividend to $0.60 each quarter, which is 11% higher than the last payment.

Don’t wait too long because you need to own shares by June 17 (Wednesday) to get the higher payment.

The higher dividend puts the dividend yield just under 3%, which seems low until you realize the growth.

Hamilton Lane went public in 2017 and has paid and raised its dividend every year since.

Since its first dividend in 2017, Hamilton Lane has averaged almost 15% growth each year! 

And it has plenty of room to keep growing its dividends.

Hamilton Lane’s dividend payout ratio is only 33%, which is much lower than other asset managers.

Unfortunately, it’s not all great news for Hamilton Lane.

Its stock price is down over 50% since its high reached in November 2024.

Revenue, earnings, and free cash flow are all growing by double-digits each year, so what’s going on?

High interest rates are hurting private market investing since investors can get high returns by simply investing in bonds.

Plus, higher interest rates are hurting private equity since it’s more expensive to finance deals.

However, despite the higher rates, Hamilton Lane continues to grow.

And the stock is insanely cheap right now.

Its price-to-earnings (PE) is only 13.5x, which has never been lower and is almost half of its historical average.

Plus, Hamilton Lane’s free cash flow margin of 55% over the past 12 months is an all-time high for the company.

Free cash flow margin is really important for dividend investors because it measures how well a company can convert its revenue into free cash flow.

If you’re looking for a great “buy low” opportunity, along with some excellent dividend growth, then Hamilton Lane should be near the top of your list.

What dividend stocks are you looking at right now?

Michael Jennings

This post originally appeared at Dividend Stocks Research.

Category: Dividend Stocks