Invest $10,000 in This TSX Stock for $1,100 in Annual Dividends

High-dividend TSX stocks such as Fiera Capital provide investors with an attractive yield in 2023. Let’s see if the TSX stock is a buy.

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At a time when equity markets are volatile, dividend stocks provide investors with a semblance of certainty. A bearish sentiment primarily driven by a sluggish global economy has driven valuations of stocks across sectors significantly lower. But the pullback in share prices has driven dividend yields higher, as the two are inversely related.

So, income-seeking dividend investors can consider buying shares at a discount and benefit from outsized yields right now. While dividend payouts are not guaranteed, you can identify companies that are fundamentally strong with the ability to maintain payouts across business cycles.

One such high-dividend stock is Fiera Capital (TSX:FSZ), which currently yields over 11%.

Is Fiera Capital a top dividend stock?

Fiera Capital is an alternate asset manager, which generates revenue from management fees and performance fees. So, its sales are directly tied to the assets under management, or AUM.

Fiera Capital ended 2021 with an AUM of a record $188 billion, allowing the company to report sales of $737.8 million that year. Its AUM fell to $158.5 billion in 2022, driving its top line lower to $670 million.

Fiera Capital explained equity and fixed-income markets were reeling under pressure in 2022, resulting in a decline in AUM. However, the AUM of its private markets segment was up 14.5%.

The company remains bullish on the long-term prospects of the private markets. Its AUM in this business has grown by 14% annually in the last three years to $18.2 billion. Comparatively, its sales derived from this segment have grown by 20% annually since 2019 to $204 million.

Fiera Capital stock is undervalued

Fiera Capital is focused on delivering robust returns to its base of institutional and high-net-worth customers. The company claimed around 96% of equity and 85% of fixed-income AUM have outperformed the benchmark in the last three years.

Valued at a market cap of $791 million, Fiera Capital is forecast to increase sales to $698 million in 2023 and $742 million in 2024. Comparatively, its adjusted earnings are forecast to improve to $1.27 per share in 2024 from $1.17 per share in 2022.

So, FSZ stock is priced at just 1.05 times 2024 sales and six times forward earnings, which is quite cheap, given its tasty dividend yield.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Fiera Capital$7.711,297$0.215$279Quarterly

Fiera Capital pays investors annual dividends of $0.86 per share, translating to a forward yield of 11.1%. So, an investment of $10,000 in FSZ stock will help you earn $1,110 in annual dividends. Moreover, in the last 19 years, these payouts have risen at an annual rate of 7%.

If Fiera Capital continues to increase dividends by 7% annually, your annual dividends will almost double to $2,200 in the next 10 years.

Fiera Capital stock is also trading 41% below all-time highs. In addition to a solid dividend payout, investors can also benefit from capital gains in the long term.

The Foolish takeaway

Fiera Capital and its peers attract investor capital during a bull run allowing them to increase sales and profit margins consistently. However, during a bear market, investors park their funds in safe-haven assets such as gold and treasuries.

So, if you expect the bear market to end by 2023, it makes sense to buy shares of Fiera Capital right now.

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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Fiera Capital. The Motley Fool has a disclosure policy.

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