Revealed: Why I’m Adding This 7.7% Yielder to My Portfolio

Fiera Capital Corporation (TSX:FSZ) is quietly becoming a dividend powerhouse.

| More on:
edit Person using calculator next to charts and graphs

Image source: Getty Images.

I admit it. I’m a sucker for high yield.

This comes with an important caveat, of course. I don’t choose just any high-yield stock. I’m looking for companies that offer sustainable payouts, ideally with a little dividend growth mixed in there, too. This creates a perpetual income machine that I can use to pay for vacations, supplement my family’s income in lean times, or just reinvest into additional dividend-paying stocks.

Isn’t compounding wonderful? I love when money turns into more money.

I’ve been recently adding one high-yielding stock to my portfolio — a company that yields a robust 7.7%. Let’s take a closer look at why I bought shares.

A massive growth story

In 2011, Fiera Capital (TSX:FSZ) had a mere $29 billion in assets under management — hardly enough to make the company a major player in the asset management space. The company needed to get bigger to attract major institutional investors.

Eight years later, it has certainly succeeded, with assets under management flirting with $150 billion. Fiera has accomplished this mostly by acquiring other asset managers. It has made some 20 acquisitions since 2012, helping to consolidate the fragmented asset manager market, especially in Canada.

After all this growth, Fiera has become Canada’s third-largest independent publicly traded asset manager, but it’s still only number 76 in North America. In other words, there’s still loads of potential for the company to get larger, especially as it starts to make more acquisitions in the United States. And just 14% of revenues come from outside North America. There’s no reason why the company can’t expand further overseas as well.

Fiera should also be able to deliver solid organic growth, as it adds to flagship funds that give institutional investors access to assets outside the stock market. Fiera has its own property fund, an alternative assets fund, a private lending fund, an agriculture and private equity fund, and others.

These funds were created for a reason. They offer exactly the kinds of assets pension plans and insurance companies want to own over the long term, without the distraction of stock prices.


Despite delivering plenty of growth over the last few years — and with gobs of potential to continue — Fiera Capital still trades at a very reasonable valuation.

Over the last 12 months, the company has generated approximately $1 per share in free cash flow. The stock currently trades hands for under $11 per share. That puts the company at less than 11 times free cash flow, which is very reasonably valued — especially when we consider the growth potential going forward.

Shares are even cheaper on a forward price-to-earnings basis. Analysts are expecting net income to hit $1.27 per share in 2019, which puts the stock at just 8.6 times forward earnings.

The dividend

Fiera Capital has been a dividend-growth machine since its 2010 IPO, hiking its payout each year. Dividend growth has been especially robust over the last year and a bit, with the company increasing its payout by $0.02 per share each quarter since the beginning of 2018.

In total, Fiera’s dividend has increased from $0.40 per share annualized in 2013 to $0.82 per share today. That’s a growth rate of more than 10% annually, which is stellar for a stock that also yields 7.7% today.

Investors don’t have to worry about the payout, either. The payout ratio based on 2019’s expected earnings is just 65%.

The bottom line

Fiera Capital offers everything I’m looking for in a long-term dividend investment. It’s in a nice business with solid growth prospects. It offers a sustainable payout with dividend-growth potential. And it pays a generous yield today.

This is why I added the stock to my portfolio. Perhaps you should do the same.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nelson Smith owns shares of Fiera Capital Corporation. 

More on Dividend Stocks

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

3 Evergreen Investments for Beginners

Choosing leaders from industries that consistently perform well regardless of the market conditions is one of the simplest ways of…

Read more »

Dividend Stocks

Passive Income: Buy Dividends to Rule Your Retirement

You can establish a passive-income stream by investing in high-dividend ETFs like BMO Equal Weight Banks ETF (TSX:ZEB).

Read more »

consider the options
Dividend Stocks

Magna Stock: Is a 3% Dividend Yield Enough to Make Investors Stay?

Magna (TSX:MG)(NYSE:MGA) stock has grown 8% in the last week but is down over the last year. So is a…

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Retirees: How to Stay Calm in Market Downturns

Are you losing sleep because of market volatility? Here are three tips that should give you peace of mind.

Read more »

Index funds
Dividend Stocks

Buy the Pullback: 2 Top TSX Dividend Stocks for RRSP Investors

The drop in the TSX Index is giving RRSP investors a chance to buy top dividend stocks at cheap prices.

Read more »

Dividend Stocks

2 Stable REITs for $177 in Monthly Income

These two REITs offer stable income you can bring in each month but also have valuable numbers for investors wanting…

Read more »

funds, money, nest egg
Dividend Stocks

3 of the Best Dividend Stocks to Combat Inflation and Rising Interest Rates

Suncor, TD Bank, and Tourmaline are dividend stocks benefitting from rising inflation and rising interest rates.

Read more »

Community homes
Dividend Stocks

Housing Correction of 20% Could Come in 2022: How to Prepare

A housing correction of up to 20% could be coming thanks to inflation and interest rates, but there are other…

Read more »