Both manage money for clients (as their names suggest) and they are both reasonably good at it judging by their performance figures.

Outperforming the market 

Today, Premier reported it received £175m of client assets for the three months to the end of 31 March, taking total net inflows for the six months to £411m. For the rolling 12-month period to the end of March, inflows totalled £847m. 

It seems investors are attracted to the firm’s funds thanks to management’s ability to pick stocks. Indeed, over the five years to the end of March, 97% of assets managed by Premier (excluding absolute return funds, investment trusts and segregated mandates) outperformed the median return of similar funds in the same sector. 

Following this robust performance it looks as if Premier is well on the way to hitting City forecasts for 2018. Analysts have pencilled in earnings per share growth of 70% for 2018, and a further increase of 21% is expected for 2019, leaving the group trading at a forward P/E of 12.3. 

But it’s the City’s dividend expectations for the company that really get me excited. Analysts are expecting Premier to distribute a total of 10.4p per share to investors this year, up 31% year-on-year and giving a dividend yield of 4.4%. The payout is expected to grow by a further 21% for 2019. 

So, if you are looking for a cheap, fast-growing company, with dividend aristocrat qualities, you shouldn’t overlook Premier (there’s also £18m of net cash on the balance sheet to support the payout.) 

Future dividend star

Impax Asset Management also published an upbeat update on its asset flows this morning. According to CEO Ian Simm, “In the first half of this financial year we have received over £1bn of new money, and our new business pipeline remains encouraging.” These new funds include the addition of the Pax World Management acquisition, which closed in January. On January 1, total firm assets under management amounted to £8.2bn. 

And just like Premier, analysts believe that if Impax can keep up its rate of client acquisition, then earnings are set to surge over the next two years as it benefits from economies of scale. 

Specifically, analysts are expecting earnings to jump 60% in 2018, supporting an increase in the full-year dividend payout of 24%. If the company does hit this target it will have increased its dividend by 380% since 2012 and earnings per share will have grown by a similar amount since 2013. 

Analysts are also forecasting dividend growth of 25% for 2019 which, if it materialises, will mean that the distribution has grown by 31% per annum since 2012. 

With this being the case, while the current dividend yield of 2.2% might not seem like much, if you bought shares in Impax today, according to my figures, by 2021 the yield on cost will be 4.8%.

The post 2 fat dividend growth stocks you can’t afford to ignore appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Full-year results from the group today showed that £747m in new money had been invested with the fund manager during the past year, to take total assets under management to £6.1bn, up from £5.0bn a year ago. It marked the 18th consecutive quarter of inflows for the business, demonstrating that demand for top-performing actively managed diversified funds remains strong as people seek long-term investment outcomes.

Underlying pre-tax profits for the period climbed by 39% to 14.7m as the firm revealed a 23% increase in net management fees to £45.9m and a slight improvement in its net fee margin from 73.5 basis points to 73.9bps.

Market pressures

Premier’s recent results have been helped by its strong investment performance and its greater focus on multi-asset, fixed income and absolute return funds — but not everything is going in its favour. There are a number of headwinds ahead, which include the risk of a prolonged period of economic uncertainty for the UK economy and a challenging investment and business environment.

Margins in the fund management industry are also in long-term decline due to the rapid rise in popularity of low-cost passive funds and Premier is not immune to structural changes taking place in the market. Sure, it has so far weathered the storm well, but it’s been helped by recent pension changes that allow people to access the money in their pension funds earlier. In the long term, it will face a tough job to prove its worth against lower cost rivals.

Still, looking at the consensus analyst forecasts, Premier Asset Management appears to offer tempting value. With City analysts forecasting underlying earnings of 15.3p for 2018, the stock is worth just 13.6 times its expected earnings, against the sector peer average of 15.8.

A prospective dividend yield of 5.3% also sweetens the investment case, with analysts expecting a 36% increase in its payout in the coming year.

Another in the sector

Premier is not alone is seeing robust fund inflows. Jupiter Fund Management (LSE: JUP), its larger rival, is another in the sector worth keeping an eye on.

It has recently been expanding into the fixed income and multi-asset market in the pursuit of faster growth and business diversification. And it’s a strategy that is so far paying off, with the fund manager seeing inflows climb to record levels in the third quarter of 2017. Net inflows between July and September topped market expectations, at £1.2bn.

Looking ahead, I’m confident that Jupiter will continue to deliver further growth, helped by its scalable operating model and growing demand for its fixed income and multi-asset strategies. City forecasts point to earnings growth of 16% in the year to April 2018 with a further expansion of 7% in the following year.

With profits growing robustly, analysts are expecting similar increases for dividends too. A 30p per share reward is currently predicted for 2017, which translates into a bumper prospective yield of 5.1%.

The post This ‘secret’ growth and income stock could have a lot more to give appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The converse is that buying shares in investment managers can be good for your wealth — instead of paying fees, you’re getting a cut of them for yourself.

Premier Asset Management (LSE: PAM) only floated on AIM in October 2016, yet the share price has already risen by 17.5%, to 156.5p, and I reckon there should be a lot more to come.

At the interim stage, the firm reported £311m in net inflows for the six months, with £667m over a rolling 12-month period. That’s 16 quarters of net inflow in a row now, which is an enviable record to have.

Impressive performance

Assets under management (AUM) are on the up too, growing by 11% to £5.5bn. And over the past five years, 96% of Premier’s AUM were performing above median levels with 80% in the top quartile. That’s the kind of performance that’s likely to keep those inflows going.

Pre-tax profit for the period climbed by 32% to £6.25m, for earnings per share of 3.03p, with analysts forecasting around 11.5p for the full year.

A number of Premier’s funds are targeted at above-average income yields, and the company apparently intends to treat its shareholders similarly. At flotation time, we were told of a dividend policy “that reflected the expectation of future cash flow generation and the long‐term earnings potential of Premier.“

That seems to be coming good, with a 5% dividend yield forecast for this year and a nice boost to 7.3% on the cards for 2018. 

Student property

My second high-yield pick today is Empiric Student Property (LSE:ESP), which is in the profitable and cash-rich business of owning and operating UK student accommodation.

Dividend yields are progressive, with yields of 5.4% and 5.5% predicted for this year and next. The firm has already told us it is targeting a payment of 6.1p per share for 2017, so that at least should be safe.

In the past couple of years the dividend has not been covered by earnings, but Empiric is paying out cash as property income distribution under Real Estate Investment Trust rules, and earnings look set to rise above the dividend in the near future. So over the long term, I see this as a potentially very rewarding income investment.

Growth too?

That’s not to say there won’t be any capital growth, because it’s looking like we’ll get that too. A revised investment policy should see the company “able to acquire or develop a more diverse range of student accommodation formats, catering for students from their first year as undergraduates to postgraduates, both UK and international.“

At December 2016, Empiric enjoyed a relatively modest loan-to-value ratio of 31%, and boasted a net asset value of 105p per share — the shares are currently priced at 114p, for a price-to-book value ratio of a bit less than 1.1, which looks attractive to me.

A forward P/E of 18 for 2018 might look a bit high compared with the FTSE average, but with the new development plan in place, the value of Empiric’s property portfolio rising, and those high and progressive dividends looking solid, I reckon the shares are good value now.

The post These 5%+ yielders could make you a million appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Upbeat performance

Results released by Premier Asset Management (LSE: PAM) on Tuesday showed it is making encouraging progress. The company’s assets under management increased to £5.5bn, with net inflows in the three months to 31 March 2017 being £170m. This meant that total net inflows in the rolling 12 months to 31 March were £667m, which shows that the company’s investment performance and marketing activities are working well.

In fact, Premier Asset Management has 95% of assets under management performing above the median over three years. Over a five-year period, 80% of its assets under management are in the first quartile, which shows that its performance remains strong.

With a dividend yield of 5.9%, Premier is one of the highest-yielding UK-listed shares at the present time. However, its dividends are due to rise by 41% next year, which puts it on a forward yield of 8.3%. With dividends due to be covered 1.4 times by profit in 2018, its shareholder payouts appear to be highly sustainable, which could lead to higher growth in future years. As such, now seems to be the perfect time to buy it.

Dividend growth potential

Premier is not the only financial services company with high dividend growth potential. Specialist asset manager Intermediate Capital (LSE: ICP) has a dividend coverage ratio of 1.9, which suggests growth in shareholder payouts could be high in future years. Therefore, while its dividend yield of 3.7% may be roughly in line with that of the wider index, it has significant scope to rise over the medium term.

Certainly, the asset management industry can be a relatively volatile place to invest. The performance of funds can disappoint and if the global economy endures a downturn, Intermediate Capital’s financial performance could be downgraded. However, with the company having recorded three consecutive years of rising earnings on a per share basis, it appears to have a sound business model and growth strategy.

With Intermediate’s shares trading on a price-to-earnings (P/E) ratio of 14, they seem to offer fair value at the present time. Given that inflation is forecast to rise and the company has such a high dividend coverage ratio, it would be unsurprising for investor demand for its shares to rise. This could provide capital gains and equate to index-beating total returns over the coming years.

The post Two bargain dividend stocks I’d buy in April appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.