Spending time in the market is rewarding as your invested money makes more money. There are two ways you can earn investment income. Sell the stock at a higher price and earn a capital gain or earn a dividend per share. If you take the second route, there are high-risk, high-yield dividend stocks that can convert your $7,000 investment today to $2,000 in yearly passive income 10 years from now. However, there is a risk of dividend cuts in the short term.
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The high-yield dividend stock to buy the dip
Fiera Capital (TSX:FSZ) is a small-cap stock currently trading near its 52-week low. The asset management company invests in private and public markets such as equities, debt, real estate, and agriculture for institutions, private investors, and financial intermediaries. It earns a base management fee for managing assets. The higher the assets under management (AUM), the higher the management fee. In addition to this, the company also earns a performance fee if the portfolio generates good returns.
Thus, Fiera Capital’s stock price fluctuates depending on the overall equity market performance. The company has been giving regular dividends from the base management fee for the last 15 years without a dividend cut. However, I would not rule out the possibility of a dividend cut as a recession could significantly reduce its revenue. In a recession, people hold onto cash instead of investing as they lose confidence in the stock market.
However, the risk of a dividend cut comes with a great reward of a 14% yield. Fiera Capital stock is range-bound, with the stock hovering between $6.50 and $9.50 in the last five years. How much in dividends can it earn you?
A $7,000 investment 10 years back could earn you $1,138 in yearly passive income
Fiera Capital offers a dividend reinvestment plan (DRIP). A $7,000 investment in 2016 in Fiera’s DRIP would have bought you 658 shares at $10.64 per share. These shares would have earned $407.8 in annual dividends, which if reinvested would have bought around 30.7 DRIP shares in 2017.
| Year | FRZ Dividend/Share | FSZ Stock Price as of January 1 | DRIP shares | Total Share Count | Annual Dividend Income |
| 2025 | $0.864 | $7.85 | 130.17 | 1317 | $1,137.88 |
| 2024 | $0.861 | $6.71 | 134.8305 | 1187 | $1,021.85 |
| 2023 | $0.86 | $9.39 | 88.26465 | 1052 | $904.71 |
| 2022 | $0.86 | $10.04 | 74.81389 | 964 | $828.81 |
| 2021 | $0.845 | $10.90 | 63.60195 | 889 | $751.13 |
| 2020 | $0.84 | $12.40 | 52.36112 | 825 | $693.26 |
| 2019 | $0.84 | $12.03 | 47.06486 | 773 | $649.28 |
| 2018 | $0.78 | $12.94 | 37.25216 | 726 | $566.19 |
| 2017 | $0.7 | $13.27 | 30.73811 | 689 | $482.04 |
| 2016 | $0.62 | $10.64 | 658 | $407.90 |
By 2025, the DRIP shares could increase your share count to 1,317 and earn annual dividend income of $1,137.
I have annualized the reinvestment cycle for ease of calculation. The actual reinvestment happened quarterly. DRIP shares were purchased at the average market price of the share. The above table is a rough calculation to help you make an educated estimate of the possible dividend income a $7,000 investment in this stock could earn. You could add a 5–7% error term.
A $7,000 investment today could earn you $2,010 in yearly passive income 10 years from now
However, the situation is different today. Fiera Capital stock has dipped 39% in the last four months of the bear market. Its performance fee halved in 2024.
Investing $7,000 in this dip can buy you 1,142 shares of Fiera Capital at $6.13 per share and lock in a 14% yield. Assuming the company maintains its $0.864 dividend per share for the next 10 years and buys DRIP shares at an average price of $10.50. The $7,000 investment today could earn $2,010 in yearly passive income in 2034.
| Year | FSZ Dividend/Share | DRIP shares bought at $10.5/share | Total Share Count | Annual Dividend Income |
| 2025 | $0.86 | 1142 | $986.69 | |
| 2026 | $0.86 | 93.97029 | 1235.97 | $1,067.88 |
| 2027 | $0.86 | 101.7027 | 1337.673 | $1,155.75 |
| 2028 | $0.86 | 110.0714 | 1447.744 | $1,250.85 |
| 2029 | $0.86 | 119.1287 | 1566.873 | $1,353.78 |
| 2030 | $0.86 | 128.9313 | 1695.804 | $1,465.17 |
| 2031 | $0.86 | 139.5405 | 1835.345 | $1,585.74 |
| 2032 | $0.86 | 151.0227 | 1986.367 | $1,716.22 |
| 2033 | $0.86 | 163.4497 | 2149.817 | $1,857.44 |
| 2034 | $0.86 | 176.8992 | 2326.716 | $2,010.28 |
Even if Fiera cuts the dividend in the short term and grows it in the following years, the average could come near the $2,000 amount in the long term.
