BX is undervalued relative to history due to sentiment; growth in distributable earnings and AI infrastructure exposure support adding it to a watchlist.

Finally, we have Blackstone. To be perfectly honest , this stock was not technically on the list I had prepared. For the first time, I'm placing an arrow from someone else's list.

That's because I recently interviewed David Bonson on the "Mispriced" podcast , who manages over $10 billion using a dividend growth strategy.

The stock that David Bunson told me was mispriced is " Blackstone". His logic was very simple and straightforward. It was noted that the stock is still below its all- time high while its cash flows and dividends continue to grow.

However, the stock remains hurt by negative sentiment surrounding private credit and alternative asset managers . He is absolutely right about that.

Last year, Blackstone's stock fell by 31.7%. Since the beginning of the year, it has fallen by about 18.6%, and even as we speak, the stock has continued to decline. Last month, the stock fell by about 11%.

However, trading at these prices makes the payout metrics look much more attractive . But Blackstone is achieving a return of around 4.2%. This is a very good initial dividend yield, coupled with the fact that dividend growth has been very attractive over the past few years.

The distribution ratios may seem a bit strange , but the reason is that the main metric we should be concerned about at Blackstone is distributable earnings. However, one thing you will notice is that these dividend payouts have historically experienced considerable fluctuations year after year.

Why does this happen? Okay, once again, we need to make sure we understand the business model in general. Blackstone is the world’s largest alternative asset manager, with investments in private equity, real estate, credit, infrastructure and other alternative investments.

Bondson made the argument that Blackstone's ability to generate underlying cash continues to improve, even though the valuation reflects some of the broader uncertainty in the market.

For example, they announced a 22% increase in fee-related earnings and a 26% increase in distributable earnings in the second quarter. Distributable earnings amounted to 1.52 per share, while fee- related earnings amounted to 1.43 per share.

This is important because, again, why do their dividend payments fluctuate ? Well, if you delve into their second-quarter 2026 earnings statement, take a closer look at what it says about their dividend policy.

Right here. Blackstone intends to pay quarterly dividends to ordinary shareholders representing approximately 85% of Blackstone’s share of distributable profits . Therefore, they pay out a certain percentage of their distributable profits as dividends, usually around 85%.

Suddenly, it makes sense why we see these distributions experiencing some fluctuations over time. For this reason, it is very important that we see growth in underlying distributable earnings.

The other interesting angle regarding Blackstone is when we think about artificial intelligence, because they are clearly not a traditional AI stock, but they have become a major beneficiary of the infrastructure portion of this expansion.

For example, the management also stated that nine of the top 10 increases in the value of its investments in the second quarter were related to artificial intelligence. The value of its dedicated infrastructure platform has increased by 7.2% during the quarter and 29% over the past year.

While its QTS data center business was in fact the biggest driver of growth across the company. This is a huge advantage for Blackstone, because they generally do not necessarily have to predict which AI model will ultimately win.

They will continue to gain exposure to artificial intelligence in general and to the overall growth of the market.

Therefore, if we consider Blackstone now from a valuation perspective , it is trading at a much lower price than it has historically traded, at least on a price-to-earnings ratio basis .

A forward-looking view with a discount of approximately 20% compared to its five- year average. Based on the past twelve months, there is a discount of approximately 25%.

A forward-looking view with a discount of approximately 20% compared to its five-year average. Therefore, this stock is definitely worth putting on your watchlist. Just make sure you have a deep understanding of the actual business model and why those distributions fluctuate a little over time.