Why I’m Obsessed With This High-Yield Dividend Stock

A high-yield dividend stock is a strong buy for dividend investors chasing performance and generous passive-income streams.

| More on:
Increasing yield

Image source: Getty Images

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.

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

More on Dividend Stocks

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

You can buy these three Canadian dividend stocks with an investment as low as $3,000 right now and expect to…

Read more »