The release of its full-year results report on 19 September 2023 gave Hargreaves Lansdown (LSE: HL) shares a boost on the day. And for good reason.
The FTSE 100 company knocked the ball out of the park with most of the numbers worth watching. And perhaps most importantly, the directors underlined the success of the business by slapping another 4.5% on the total dividend for the year.
Hargreaves Lansdown is the UK’s largest digital wealth management service and many private investors use its platform for holding shares and funds. But the company itself has been a decent investment for many over the years as well.
However, as the business and its markets have matured, Hargreaves Lansdown has transitioned from being a fast-growing enterprise to being more of a cash-cow.
A robust financial performance
Meanwhile, these full-year results demonstrate that those putting their faith in the long and impressive dividend record have made a good call. The business keeps delivering and the cash keeps flowing to support those dividend payments.
For the trading year to 30 June 2023, total assets under administration rose by 8% year on year. And from that turnover, the company scored some impressive financial gains. For example, revenue rose by 26% and underlying diluted earnings per share shot 47% higher.
Chief executive Dan Olley described a “robust” financial performance for the full year in a “challenging” broader economic environment.
But if the company can deliver such decent results when under pressure, what may happen to the business if conditions improve? There’s clear potential here for shareholders. And with the share price near 786p, the forward-looking dividend yield is just below 6% for the current trading year.
That looks like a decent income to keep investors warm while waiting for general macroeconomic recovery and growth.
Business diversification
The business attracted around 67,000 new clients in the period taking the total to around 1.8m. And Olley said client retention was “stable” at 92%.
Meanwhile, there was “notable” growth in the firm’s active savings proposition aimed at providing competitive rates for cash savings. And such diversity in the business is one way the company is able to thrive in what has become a competitive market over the years.
However, the increasing competition in the digital wealth management industry is an ongoing threat to the company. And it’s one reason the stock and the business will likely never return to high growth.
Nevertheless, Hargreaves Lansdown is holding up well. And it seems likely the dividend stream will continue for years to come. That said, positive long-term outcomes are never certain.
Looking ahead, Olley is optimistic and sees an opportunity to capture some growth and to optimise execution and cost discipline within the business. And on balance, the stock seems worth consideration now for a long-term dividend-focused and diversified portfolio of shares.
