The S&P/TSX Composite Index closed at 21,639.10, its lowest closing since March 6, on June 14, 2024, to register its fourth weekly decline. However, despite the recent weakness, some Canadian stocks display resiliency. My obsession with a particular high-yield dividend stock is justified, and I recommend a “hold” rating.
For income-focused investors chasing performance and generous passive income, Fiera Capital (TSX:FSZ) should be on your watchlist, if not your buy list. The $718.8 million independent asset management firm has endured a challenging environment, including high interest rates.
At $6.79 per share, current investors enjoy a 17.86% market-beating return on top of a mouth-watering 12.67% dividend yield. The interest rate cut early this month and possibly more in the ensuing quarters could be a tailwind for this outperforming stock.
Steward of capital
Fiera Capital operates globally, providing customized and multi-asset solutions to the public and private sectors, including institutional, financial intermediaries and private wealth clients. As a steward of capital, the goal is to build sustainable prosperity for all its clients.
The critical measure of performance is the assets under management (AUM). Fiera acknowledges the various risks and uncertainties that hound the industry. Poor investment performance might cause it to lose existing clients and not attract new ones. These risk factors could adversely impact AUM, management fees, profitability, and growth prospects.
In 2023, AUM and total revenues increased 2% and 0.8% to $161.7 billion and $686.5 million, respectively, compared to 2022. Notably, net earnings jumped 130.6% year over year to $58.45 million. “Although 2023 started with uncertain headwinds, we are very pleased with full-year results,” said Jean-Guy Desjardins, chairman of the board and global chief executive officer (CEO) of Fiera Capital.
Fiera Capital was recognized as the top Performer at the Global Manager Research 2023 Top Performer Awards. Desjardins said, “We are proud to receive this recognition from GMR. Celebrating our recognition as Top Performers at the Global Manager Research Awards underscores Fiera Capital’s recognized excellence in asset management.”
Solid growth plan
According to Desjardins, Fiera Capital started this year with a solid growth plan and increased sales and distribution resources in all its four key regions. In the first quarter (Q1) of 2024, AUM and total revenues rose 0.3% and 7.02% to $165.2 billion and $168.1 million versus Q1 2023, respectively. Net earnings reached $7.65 billion compared to the $2.51 million net loss a year ago.
The company opened an office in Zurich, Switzerland, last February. Klaus Schuster, executive director and CEO at Fiera EMEA (Europe, Middle East, and Africa), said that the first office in one of the world’s most important wealth centres is a natural step in Fiera’s growth story. Fiera also opened its Hague, Netherlands office, the fifth site in EMEA, as part of its ongoing global expansion.
Impending rate cuts
Jean-Guy Desjardins said the Bank of Canada’s recent rate reduction to 4.75% did not dramatically or significantly lift the markets. However, he believes the Canadian central bank has a clear path to a 3% interest rate and should have the flexibility to keep cutting. Based on market analysts’ average price target, FSZ could rise 11.5% to $7.57 in 12 months.
