Apollo Global Management: Total Return Surpasses Earnings Growth

In the dynamic world of investing, Apollo Global Management (NYSE:APO) has emerged as a standout performer, with its total return for investors growing at a faster pace than its earnings over the past five years. This impressive feat is a testament to the company's strategic investments, robust asset management, and a commitment to shareholder value. Let's delve into the factors that have driven this remarkable performance and explore why Apollo Global Management is a compelling choice for income-seeking investors.

Strong Asset Management Growth

One of the key drivers behind Apollo Global Management's outperformance is its significant growth in assets under management (AUM). As of September 30, 2024, Apollo's AUM stood at $751 billion, representing a 15% increase from the previous period. This growth has been fueled by strong inflows, particularly in credit-focused strategies and wealth products. The company's ability to attract and manage substantial assets has not only bolstered its financial position but also enhanced its total return for investors.

Record Fee-Related Earnings

Apollo Global Management's fee-related earnings have reached new heights, with a quarterly record of $554 million reported in the fourth quarter of 2024. This 21% increase from the previous period underscores the profitability of the company's asset management segment. Fee-related earnings are a critical component of the company's revenue, and their growth has been a significant contributor to the total return for investors.

Dividend Growth and Shareholder Yield

Apollo Global Management has demonstrated a strong commitment to returning value to its shareholders through consistent dividend growth. The company has increased its dividends for two consecutive years, with an annual dividend of $1.85 per share and a dividend yield of 1.13%. This stable income stream, combined with the company's shareholder yield, which includes dividends, buybacks, and debt paydown, has been instrumental in driving the total return for investors.

Investment Strategies: Credit and Private Equity

Apollo Global Management's investment strategies, particularly in credit and private equity, have played a pivotal role in its total return performance. As of September 30, 2024, Apollo had $518 billion in credit investments and $192 billion in equity investments. These strategic allocations have driven strong growth in fee-related earnings and overall profitability. The company's origination volume, which refers to identifying high-quality credit financing opportunities, reached $61 billion, further underscoring the success of its credit strategy.



Market Performance and Total Return

Apollo Global Management's total return performance has been impressive, with a 23.50% return over the past 12 months, compared to 7.58% for the S&P 500. This outperformance can be attributed to the company's strategic investments and strong earnings growth. For example, Apollo's revenue CAGR (Compound Annual Growth Rate) over the past 3 years was 58.04%, and its net income CAGR was 33.91%. These figures highlight the company's ability to generate substantial earnings growth through its investment strategies.

Conclusion

In conclusion, Apollo Global Management's total return for investors has risen faster than earnings growth over the past five years due to its strong asset management growth, record fee-related earnings, consistent dividend growth, and successful investment strategies in credit and private equity. As income-seeking investors, Apollo Global Management offers a compelling opportunity to benefit from its robust performance and commitment to shareholder value. By focusing on these key factors, investors can make informed decisions and capitalize on the company's impressive track record.