For a Shot at $5,000 in Annual Passive Income, Buy 5,814 Shares of This TSX Stock

Fiera Capital is a high-yield dividend stock TSX investors can consider buying to create a passive-income stream in 2023.

| More on:
A worker drinks out of a mug in an office.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in high-yield dividend stocks can help you create a passive stream of dividend income. But you also need to consider the associated risks before investing in dividend stocks. For example, dividend payouts are not guaranteed and can be suspended or cut if company financials deteriorate.

So, you need to identify companies with strong fundamentals and a sustainable yield to ensure dividends aren’t rolled back. Ideally, dividend-paying companies also need to increase cash flows consistently, allowing them to enhance payouts and build shareholder wealth over time.

One high-yield dividend stock you can consider buying in 2023 is Fiera Capital (TSX:FSZ) an asset management company. With a yield of 13.4%, FSZ stock should be on the radar of income-seeking investors. Let’s see why.

The bull case for Fiera Capital stock

Valued at a market cap of $650 million, Fiera Capital has close to $165 billion in assets under management (AUM). Similar to other asset managers, Fiera Capital experienced significant outflows in 2022 due to the volatility across financial markets and asset classes. But its Private Markets platform continued to gain momentum ending 2022 with an AUM of $18.2 billion, an increase of 14% year over year.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Fiera Capital$6.365,814$0.215$1,250Quarterly

Fiera Capital aims to build optimized portfolios to deliver on client objectives. It also offers innovative investment strategies tailored to the specific requirements of its clientele.

Despite its underperformance in the last year, Fiera Capital has a payout ratio of less than 80%. In case the equity markets continue to surge higher in the second half of 2023, Fiera Capital should easily outpace Bay Street’s earnings estimates, lowering its payout ratio considerably.

Fiera Capital has increased its base management fees from $485.6 million in 2018 to $603 million in 2022. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) has risen from $137.5 million to $191.8 million, increasing its margin by 280 basis points in this period.

Priced at six times forward earnings, FSZ stock is very cheap and trades at a discount of 25% to consensus price target estimates.

The bear case for Fiera Capital stock

Like any other investment, Fiera Capital carries certain risks. There is a chance for the equity markets to move lower and re-enter bear market territory, especially if threats of an economic recession come true. In this case, investors are likely to liquidate their positions, lowering the AUM of Fiera Capital, which, in turn, will reduce its earnings.

Created with Highcharts 11.4.3Fiera Capital + iShares S&p/tsx 60 Index ETF PriceZoom1M3M6MYTD1Y5Y10YALL28 Jun 201327 Jun 2023Zoom ▾20142015201620172018201920202021202220230www.fool.ca

Basically, Fiera Capital’s stock price is tied to the performance of the equity markets. In case it’s AUM contracts, fee-based earnings might fall off a cliff resulting in a dividend cut.

Moreover, Fiera Capital has historically trailed the broader markets. In the last five years, FSZ stock has fallen by 19%, while it has gained 10% since June 2003, after accounting for its dividends.

The Foolish takeaway

For you to earn $5,000 in annual dividends, you need to buy 5,814 shares of Fiera Capital, which will be worth $36,977 today. But investing such a huge sum in a single stock is quite risky. Instead, you need to identify similar other high dividend stocks and diversify your risk in the process.

Should you invest $1,000 in Fiera Capital Corporation right now?

Before you buy stock in Fiera Capital Corporation, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Fiera Capital Corporation wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,750.10!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.

See the Top Stocks * Returns as of 1/22/25

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

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Dividend Stocks

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

Better Railway Stock: Canadian Pacific vs Canadian National Railway?

Railway stocks in Canada offer a duopoly that lasts, but which is the better buy for long-term holders?

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

3 Rock-Solid TSX Picks for Forever Portfolios

These three top TSX stock picks could be perfect for your forever portfolio as they have the potential to deliver…

Read more »

Happy golf player walks the course
Dividend Stocks

3 TSX Leaders to Build Long-Term Wealth

Three TSX leaders can help Canadians build long-term wealth and ensure lasting financial security.

Read more »

ETF chart stocks
Dividend Stocks

Want a $1 Million Retirement? Look at These 3 Canadian ETFs to Hold for Decades

Canadian ETFs like iShares S&P/TSX Capped Composite Index Fund (TSX:XIC) are among the best in class.

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

The Canadian Stocks That Led Their Sectors in 2024

Canadian stocks had some big winners last year, but are they still winners in 2025?

Read more »

shoppers in an indoor mall
Dividend Stocks

Better REIT: RioCan vs Choice Properties?

RioCan REIT or Choice Properties REIT? Find out which Canadian REIT offers better yields, growth potential, and stability for passive…

Read more »

doctor uses telehealth
Dividend Stocks

Got $4,000? 4 Healthcare Stocks to Buy and Hold Forever

Healthcare stocks will always be a part of the market as essential investments, but these four look like strong long-term…

Read more »

Caution, careful
Dividend Stocks

Warning: This TFSA Red Flag Could Get You Taxed Faster Than Day Trading

Holding stocks like Fortis (TSX:FTS) in a TFSA is great, but mind your contribution limit.

Read more »