Undervalued dividend-payers

Ever considered investing in asset manager stocks? Here’s why you should.

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From the Summer 2014 issue of the magazine.

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Most investors prefer banks for stable dividend-paying stocks, but what about asset managers? They’ve underperformed banks so far this year, but analyst Scott Chan of Canaccord Genuity says returns should pick up as more money moves into equities. These three companies pay good dividends and have a lower P/E ratio than their peers.

Fiera Capital Corp. (TSX: FSZ)

13.3

2015 P/E

Yield: 3.37%

Since 2012, Montreal-based Fiera Capital has bought seven firms and is now expanding in the United States. Chan expects it to double its assets under management (AUM) over the next five years.

IGM Financial Inc. (TSX: IGM)

14.0

2015 P/E

Yield: 4.12%

Winnipeg’s IGM owns growth-oriented Mackenzie Investments, with its focus on equities, and Investors Group, with its focus on personalized financial planning. AUM is evenly split between the two.

Guardian Capital Group LTD. (TSX: GCG)

15.0

2015 P/E

Yield: 1.49%

With more than $30 billion in AUM, this Toronto company is mainly focused on institutional assets, and has strong equity, dividend and fixed-income products. Expect it to offer more global options, Chan says.

Forward Price-to-Earnings Ratio (P/E) compares a company’s current share price to its expected per-share earnings. (Data listed as of May 30, 2014.)

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