High-yield dividend stocks are a compelling bet for investors as dividend yields and share prices have an inverse relationship. So, a stock with a high yield often trades at a cheap multiple, making it attractive to income and value investors.
Since the start of 2022, several TSX stocks have been pummelled due to a range of macroeconomic factors that include rising interest rates, elevated inflation, and a slowing global economy.
Is Fiera Capital stock a buy or a sell right now?
One of the largest asset management companies in Canada, Fiera Capital has a global presence and ended Q1 of 2023 with $164.7 billion in assets under management (AUM). It delivers multi-asset solutions across public and private markets to institutional and private clients located in North America, Europe, and Asia.
Fiera Capital’s share price is tied to the performance of equity markets. In a bull run, Fiera is positioned to increase its assets under management, which in turn results in higher fees and commissions. Alternatively, its AUM declines at a significant rate in a bear market, driving down sales and profit margins.
For instance, Fiera reported record sales of $737.8 million in 2021, which fell to $665 million in 2022. Its operating income declined from $135 million to $97 million in this period.
But the drawdown in Fiera Capital stock has meant it’s now priced at less than one time forward sales and 5.8 times forward earnings, which is really cheap.
Despite a challenging macro environment, Fiera Capital’s private markets business continues to gain momentum as clients are looking to diversify their portfolios and lower overall risk. Fiera’s private markets segment ended 2022 with $18.2 billion in AUM, indicating year-over-year growth of 14%. This includes $3.3 billion in new mandates and $2.8 billion in deployed capital.
The company stated, “We are skillfully positioning ourselves, further deploying capital and maximizing the commercial potential of our platform to accelerate growth.”
Fiera Capital should be on your shopping list, especially if you expect the broader markets to stage a recovery in the next 12 months. Investors should understand that every bear market has been eventually replaced by a multi-year bull run, providing an opportunity to benefit from outsized gains.
What next for Fiera Capital stock price and investors?
In addition to its tasty dividend yield, Fiera Capital currently trades at a discount of 25% to consensus price target estimates. After accounting for dividends, total returns may be closer to 39% in the next 12 months.
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For investors to earn $1,000 in annual dividends, they need to buy 1,163 shares of the company worth almost $7,400 at its current price. Fiera Capital has increased dividends by 7% in the last 19 years. However, during the financial crisis of 2009, the company cut its quarterly dividends from $0.12 per share to $0.06 per share.
But its cheap valuation and high dividend yield can help shareholders benefit from capital gains as well as regular dividend income.