A high-yield dividend stock may not always have the best reputation, but it can be a fantastic buy if it boasts a solid long-term growth trajectory and a strong background. That's because it combines the best of both worlds: reliable income and growth potential. When you invest in a company with a proven track record and strong fundamentals, you're not just betting on quick gains; you're setting yourself up for a steady stream of passive income while enjoying the ride of capital appreciation. And there's one dividend stock that offers this up in spades.

Fiera stock

Fiera Capital (TSX:FSZ), founded in 2003, is a Canadian asset management firm that specializes in providing a range of investment solutions, from private equity to fixed income and beyond. With a strong focus on delivering results for its clients, Fiera Capital boasts a team of experts dedicated to maximizing returns while keeping risk in check. It serves a diverse clientele, including institutional investors, pension funds, and high-net-worth individuals, thereby making it a go-to player in the investment world.

What sets Fiera Capital apart is its commitment to innovation and adapting to market changes. Plus, its approach is all about collaboration and understanding client needs, thus ensuring that each investment plan aligns perfectly with individual goals — and that's continued with earnings.

Into earnings

Fiera's second-quarter results for 2024 revealed some interesting trends that investors should note. The company reported total revenues of $164.8 million, a slight dip from the previous quarter but a 3% increase year over year. This was primarily driven by growth in base management fees in Private Markets. However, it faced a decline in its assets under management (AUM), ending the quarter at $158.9 billion, down from $165.2 billion in the first quarter (Q1). Yet, Fiera is not backing down. It's seeing positive organic growth in Private Markets. And this is a bright spot amidst the overall AUM decline.

On a more positive note, Fiera's financial metrics showed resilience. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) remained stable. Meanwhile, the company achieved an impressive leap in the last-12-month (LTM) free cash flow, soaring to $121.1 million. A remarkable 168% increase compared to the same period last year. This indicates strong operational cash generation despite the pressures on revenue. Plus, the board approved a dividend of $0.215 cents per share, showcasing its commitment to returning value to shareholders. Overall, while Fiera Capital faced some headwinds, its strategic focus on Private Markets and healthy cash flow position it well for future growth!

Looking ahead

When diving into Fiera Capital's valuation metrics, there are some noteworthy highlights to consider! The company currently has a market cap of approximately $817.66 million and an enterprise value of about $1.55 billion. Fiera's trailing price-to-earnings (P/E) ratio stands at 14.13, suggesting it's reasonably valued compared to the market, especially with a forward P/E of just seven. This low forward P/E indicates strong earnings potential on the horizon, thus making it an appealing option for value investors. Additionally, the firm boasts an impressive annual dividend yield of 11.27% at writing, offering a generous return for income-seeking investors, albeit with a high payout ratio of 159.26%.

On the profitability front, Fiera Capital maintains a profit margin of 8.97% and an operating margin of 16.91%. This reflects its efficiency in managing costs relative to revenue. With a return on equity of 22.95%, it's clear that Fiera is effectively using shareholders' equity to generate profit. Although the quarterly earnings growth saw a dip of 53.30% year over year, the company has been experiencing steady revenue growth of 3.10%. With a strong cash flow position, including an operating cash flow of $164.58 million, Fiera appears well-equipped to navigate any potential challenges ahead.

Bottom line

Investors might want to consider Fiera Capital for an attractive dividend yield of 11.27%. Yet, it also offers a robust return that can sweeten your investment portfolio, especially for those seeking monthly passive income. Despite recent fluctuations, Fiera showcases solid fundamentals with a decent profit margin and a strong return on equity, indicating efficient use of capital. With positive cash flow and a commitment to returning value to shareholders, Fiera Capital is definitely worth a look for anyone aiming to boost their dividend income — all while still having the potential for capital appreciation!