I own many fast-growing, dividend-momentum stocks in my portfolio, but one of my favourites is up-and-coming asset manager Miton (LSE: MGR).
Over the past two years, Miton shares have crushed the FTSE 250, surging 171% compared to the index’s return of just 24%. And I believe there could be plenty more to come over the next few years as the company builds on its success of the past few years.
Asset growth
Miton provides fund management services with an array of funds invested in a range of asset classes. These products have struck a chord with investors — that’s not just my personal view as the numbers speak for themselves.
Today Miton reported asset under management jumped 35% year-on-year for the half year ended 30 June, to £4.5bn across the group. Investors committed a total of £616m in the period, up 216% year-on-year.
At a time when the rest of the active fund management industry is losing assets to passive investments such as low-cost ETFs and market tracker funds, Miton seems to be winning assets due to what CEO David Barron calls the group’s “genuinely active strategies,” which are beating the rest of the pack. Indeed, during the first half of 2018, two of the group’s funds were even shortlisted for being the best in their sectors.
City analysts believe Miton’s improving reputation will help the group achieve earnings growth of 12.7% this year, followed by growth of 17.8% next year, putting the stock on a forward P/E of 15.5. This multiple looks pricey at first, but Miton has approximately 12p per share of cash on the balance sheet. After stripping out cash, the shares trade at a much more attractive cash-adjusted P/E of 13. And as well as earnings growth, the firm’s dividend payout has tripled over the past six years, a performance that I believe it’s possible to replicate over the next six years, with payout cover of 2.4, and double-digit earnings growth expected for the next two years.
Put simply, it is my view that Miton’s growth is only just getting started and it’s well worth considering this stock for your portfolio.
Cash machine
Another momentum and dividend stock I believe is worth your research time is Amino Technologies (LSE: AMO).
Amino is a cash cow and momentum champion. Over the past five years, the shares have produced a total return (including dividends) for investors of 22% per annum. Over the past 10 years, the total annual return is 16%. At this rate of return, it means investors have doubled their money every 4.5 years!
Personally, I believe that it’s not going to take much effort for Amino to continue this performance. The company’s latest trading update reported that the group’s order backlog was up 40% year-on-year for the first half of 2018. City analysts are expecting the firm’s earnings per share to expand 5% for the full-year, which is disappointing, but it’s Amino’s dividend potential that really excites me.
Analysts believe Amino has scope to increase its dividend 10% for 2018, and 10% for 2019, taking the payout to 8.1p per share, or a dividend yield of 4%. With £13m of net cash on the balance sheet (just under 10% of Amino’s market-cap), it certainly looks to me as if it can afford the higher distribution.
These two momentum dividend stocks are not the only investments I’m considering right now.
