Look to asset management stocks for income.

The S&P 500 of the largest U.S. stocks is up about 19% since Jan. 1 thanks to a booming job market and massive corporate profits. One result of the strong market is that financial stocks engaged in asset management are thriving. When things are good for investors generally, these leading asset managers can increase earnings with their sophisticated strategies. The good news is you don't have to have a million bucks to share in the success of these high-priced investment funds. Many of them trade publicly as dividend stocks, and owning a share or two can help you tap into their success. Here are nine asset management stocks that income investors should consider.

Next:Artisan Partners Asset Management (ticker: APAM) Credit

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Artisan Partners Asset Management (ticker: APAM)

Artisan Partners, founded in 1994, has about $110 billion under management. Though it isn't quite as well-pedigreed as some of the larger investment firms on this list, its track record is incredibly strong and more than 400 top managers help keep the fund invested across various asset classes and geographies. The fund is smaller than at its high in 2015, but continues to put up strong performance – and more importantly for income investors, a generous dividend. The firm tends to offer an outsized payout at the beginning of each year, but the last 12 months show a yield that is more than five times the S&P 500.

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Current yield: 11.5%

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Look to asset management stocks for income.

The S&P 500 of the largest U.S. stocks is up about 19% since Jan. 1 thanks to a booming job market and massive corporate profits. One result of the strong market is that financial stocks engaged in asset management are thriving. When things are good for investors generally, these leading asset managers can increase earnings with their sophisticated strategies. The good news is you don't have to have a million bucks to share in the success of these high-priced investment funds. Many of them trade publicly as dividend stocks, and owning a share or two can help you tap into their success. Here are nine asset management stocks that income investors should consider.

Artisan Partners Asset Management (ticker: APAM)

Artisan Partners, founded in 1994, has about $110 billion under management. Though it isn't quite as well-pedigreed as some of the larger investment firms on this list, its track record is incredibly strong and more than 400 top managers help keep the fund invested across various asset classes and geographies. The fund is smaller than at its high in 2015, but continues to put up strong performance – and more importantly for income investors, a generous dividend. The firm tends to offer an outsized payout at the beginning of each year, but the last 12 months show a yield that is more than five times the S&P 500.

Current yield: 11.5%

Och-Ziff Capital Management Group (OZM)

OZM has offices around the world and uses sophisticated multi-asset investment themes that seek to harness the best profit potential in any market. Interestingly, nearly half of the cash invested in Och-Ziff comes from pension funds. That strong foundation of capital makes it unlikely that a short-term downturn in the market or a brief period of underperformance would result in panicky investors pulling out their cash and running for the exit. As a result, this asset management company is relatively stable for its size and can offer consistent dividend payments to shareholders.

Current yield: 4.4%

TriplePoint Venture Growth BDC (TPVG)

TriplePoint is, according to its literature, an "externally managed, closed-end, non-diversified management investment company regulated as a business development company." That's quite a mouthful, but basically a BDC operates in much the same way as a venture capital fund, however it trades publicly so even small-time investors can get a share of the action. TPVG has deployed its cash in a host of startups, from web-based mattress merchant Casper to recently IPO'd freelance portal Fiverr International (FVRR). As these investments return profits to TriplePoint, this stock passes that cash back to investors via regular dividends.

Current yield: 9.6%

Blackstone Group (BX)

One of the biggest names in asset management, Blackstone boasts a stunning $470 billion under management, offering a range of services from private equity funds to alternative asset management to hedge funds. The firm holds enough capital to make big deals. Last spring, reports circulated that BX was sitting on a staggering $22 billion in its private equity fund – enough to take a company as large as Chipotle Mexican Grill (CMG) private if it wanted to. Bigger isn't always better, but it's important to note that BX charges a modest management fee on every penny deposited in its funds, which means a steady flow of cash to support generous dividends.

Current yield: 4%

Ares Capital Management Corp. (ARES)

Billing itself as an alternative asset manager, global financial player Ares manages various types of investment funds largely for institutional investors. One of its particular strengths are strategies in the "noninvestment grade corporate credit markets" – colloquially known as junk bonds. Ares also offers funding directly to small and medium-sized businesses in certain circumstances. Junk bonds can be a risky investment, but there is also a built-in premium that is paid via higher interest payments. Ares is adept at balancing this bigger stream of payments with the need to avoid companies that will go bust, leading to strong revenue streams that support generous dividends to its shareholders.

Current yield: 4.6%

Carlyle Group (CG)

The Carlyle Group is a well-known investment firm that makes its home in the District of Columbia instead of on Wall Street. It specializes in direct investments that include leveraged buyouts, privatizations, divestitures and other corporate restructuring. While there are smaller shops that have a niche, CG's portfolio is vast: agribusiness and aviation to health care and retail. This flexibility and experience chasing opportunities across the breadth of the economy has given Carlyle a long-term track record that is hard to match, and a long history of generous income to its investors as a result.

Current yield: 3.3%

Legg Mason (LM)

Legg Mason is a century-old asset manager based in Baltimore, serving investors across all shapes and sizes. It runs money for foundations, sovereign wealth funds and pension systems, as well as providing managed accounts and mutual funds for "retail" investors. LM is another massive player in the asset management space, with some $750 billion in assets under management. That figure has risen along with the broader market, but more importantly the firm has plenty of cushion to stay afloat even if there is a market downturn. That should provide investors some stability along with Legg Mason's dividend potential.

Current yield: 4.2%

Apollo Global Management (APO)

Apollo and its related enterprises are built on a private equity empire, with big deals and turnarounds for famous names that include Twinkies manufacturer Hostess and kids entertainment chain Chuck E. Cheese, among others. Most recently, it executed a leveraged buyout of home security company ADT (ADT) in 2016 and a recent IPO that raised a cool $1.5 billion at the beginning of 2019 as the firm re-entered public markets. This kind of restructuring requires significant insight and expertise, as well as massive up-front investment. However, these deals keep paying off for APO – and shares keep paying a generous dividend for shareholders.

Current yield: 5.4%

Fidus Investment Corp. (FDUS)

Fidus is another firm with a lower profile, with a market capitalization of about $400 million and a specialized business that provides senior debt and financing for transactions including change of ownership and strategic acquisitions. Fidus also offers "mezzanine" financing that allows FDUS to convert its debt into an equity stake if things go well. Funding is specialized in select sectors, with top investments in mostly aerospace and defense companies and a smattering of consumer and business services names. However, with strong share price performance and a big dividend, FDUS shows that being small and specific can be quite profitable for an asset management firm that is well-run.

Current yield: 9.6%

Asset management stocks to buy for income:

Artisan Partners Asset Management (APAM)Och-Ziff Capital Management Group (OZM)TriplePoint Venture Growth BDC (TPVG)Blackstone Group (BX)Ares Capital Management Corp. (ARES)Carlyle Group (CG)Legg Mason (LM)Apollo Global Management (APO)Fidus Investment Corp. (FDUS)1 of 12

Jeff Reeves, Contributor

A veteran journalist with extensive capital markets experience, Jeff Reeves began writing for ...  Read more

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