The Motley Fool

Why I’d buy into this fast-growing company’s 4% dividend yield today

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Man holding magnifying glass over a document
Image source: Getty Images.

If you are trying to find a decent managed fund to invest in, you’ve got a tough job on your hands. It’s hard to predict whether a fund will go on to perform well even if it, or its manager, has performed well in the past.

There’s never a guarantee that previous good performance will continue, and we saw a good example of that phenomenon with the Woodford funds recently. But however well or poorly the investments chosen by a fund manager perform, the fund management company itself tends to keep collecting its fees.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Aligning with evergreen stock market winners

And as long as the funds don’t crash well below their benchmarks, there’s a good chance investors will stay loyal to them and the cash taps will remain open for the management company. Indeed, many do very well, so I reckon it’s worth considering investing directly in a fund management firm to align ourselves with the evergreen winners on the markets.

I like the look of Liontrust Asset Management (LSE: LIO). The company has an impressive record of rising revenue, earnings and dividends, which reflects in a share price that’s been tearing upwards. And today’s half-year results report for the period to 30 September contains more good news, judging by the figures.

Adjusted profit before tax rose 17% compared to the equivalent period the year before and the directors slapped almost 29% on the interim dividend. I reckon a move like that signals confidence in the outlook, and one of the chief attractions of the stock for me is the impressive record of growth in the dividend. Over the past five years, it’s up by more than 300%.

In October, Liontrust acquired a firm called Neptune Investment Management, which added £2.7bn to the figure for assets under management (AuM). On the 18 November, AuM stood at £17.9bn, which strikes me as a decent chunk of other peoples’ money from which to skim ongoing fees – which is great if you are holding shares in Liontrust!

And the investors keep rolling up, attracted by the steady performance of the firm’s 50 or so funds and, I’m guessing, by big marketing and sales effort. The headcount in the sales team suggests that to me. Net inflows for the six-month period came in at £1,367m, which compares to £723m a year earlier.

Good process

I like the way the company focuses on the investment process. On the company website, it says: We believe investment processes are key to long-term performance and effective risk control.”

I couldn’t agree more. When it comes to successful investing strategy, the process is everything. The company reckons its processes are “robust, scalable, repeatable and documented.” And that approach helps my confidence in making an investment in Liontrust itself.

Looking ahead, the company said in today’s report it’s “well-positioned” to sustain its growth trajectory “despite a challenging environment for UK asset managers.”

Meanwhile, with the share price at 890p, the forward-looking dividend yield for the trading year to March 2021 is just above 4%. I think the shares are attractive.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Kevin Godbold has no position in any 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.