Investing in high-dividend shares is just not at all times a great technique. Usually, an organization’s inventory worth and dividend yield are inversely associated. So, if an organization provides you a tasty dividend yield, it’s important to investigate whether or not the inventory worth is overwhelmed down on account of broader market weak point or company-specific fundamentals.

Ideally, you must spend money on dividend shares that take pleasure in pricing energy and generate secure money flows throughout market cycles. These firms also needs to have a sustainable payout ratio, offering them with sufficient room to reinvest in progress tasks, leading to increased money flows and dividends.

One beaten-down TSX inventory that provides you a yield of greater than 10% is Fiera Capital (TSX:FSZ). Valued at $868 million by market cap, Fiera Capital inventory trades 44% under all-time highs, growing its ahead yield to 10.2%.

Is Fiera Capital inventory a great purchase?

Fiera Capital is an asset administration firm with a widening world presence. Just like different asset managers, Fiera Capital generates income from commissions or charges, which in flip rely on the entire property underneath administration (AUM). It delivers multi-asset options throughout private and non-private asset lessons to institutional and personal wealth shoppers in North America, Europe, and Asia.

Usually, asset managers enhance their AUM throughout bull markets whereas experiencing outflows when markets flip bearish, making them cyclical in nature. As capital markets recovered final yr, Fiera Capital ended with $161.7 billion in property underneath administration, up from $158.5 billion in 2022.

Regardless of an unsure macro atmosphere in 2023, Fiera Capital elevated property underneath administration by $6.4 billion on a sequential foundation in This fall 2023. The corporate attributed capital inflows to sturdy efficiency in world fairness markets, as 98% of its public market property exceeded their five-year efficiency benchmarks.

Pushed by a rise in AUM, Fiera Capital reported income of $211 million in This fall 2023, up from $184.7 million within the year-ago interval. Fiera’s deal with reducing its price base allowed it to report an adjusted EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) of $77.6 million in This fall, up from $52.8 million in the identical interval final yr, bettering its margin from 28.6% to 36.8% within the final 12 months.

Fiera Capital emphasised it’ll deal with distribution and gross sales in key geographic areas, whereas coming into new markets because it develops enterprise alternatives in 2024.

The personal markets enterprise might be a key driver of progress in 2024 and past, provided that the phase has elevated AUM by 11% yearly and gross sales by 21% yearly within the final three years. A high-margin phase, personal markets accounted for 11% of AUM and 32% of gross sales for the corporate in This fall.

Does Fiera Capital have a sustainable dividend payout?

An enchancment in revenue margins offered Fiera Capital with the pliability to scale back web debt and strengthen its steadiness sheet. It additionally meant the asset supervisor ended 2023 with free money movement of $89.2 million, up from $58.9 million in 2022.

Given a quarterly dividend payout of $0.215 per share, Fiera Capital spent roughly $74 million on dividends, indicating a payout ratio of 83%.

Priced at 8.3 instances ahead earnings, FSZ inventory is kind of low-cost, given its excessive dividend yield and widening earnings base.