Consider these asset management stocks for income.
Financial stocks engaged in asset management are up in the stock market, as the sector has bounced back after its spring lows with more success than many retail or restaurant stocks. And while some of the most successful investment managers often have steep minimums for clients, you don’t have to have a million bucks to share in the success of these firms when they are publicly traded as dividend stocks; simply owning a share of these financial stocks can help you tap into their success. Here are nine asset management stocks that offer yields of around 4% or higher.
AllianceBernstein Holding (ticker: AB)
AllianceBernstein is a global asset management icon known for its investment management, research and services to both institutional and high-net-worth individuals. It also offers mutual funds and closed-end funds to retail investors. Collectively, these three major business lines add up to more than $600 billion in worldwide assets under management at present. While still below its one-year high, the stock has just about doubled in price since March’s market downturn. AB’s dividend payouts vary quarter to quarter based on performance, but the last 12 months of distributions add up to a very generous yield for shareholders.
Current yield: 8.6%
Artisan Partners Asset Management (APAM)
Artisan Partners, founded in 1994, has about $130 billion in assets under management. Though it isn’t quite as well-pedigreed as some of the larger investment firms out there, APAM’s track record is incredibly strong and more than 400 top managers help keep the firm invested across various asset classes and geographies. The fund is smaller than its high point in 2015, but it continues to put up strong performance — and more importantly for income investors, a generous dividend. This asset manager tends to offer an outsized payout at the beginning of each year, but the last 12 months show a yield that is roughly three times the average of stocks in the S&P 500.
Current yield: 6.7%
Apollo Global Management (APO)
Apollo and its related enterprises are built on a private-equity empire, with big deals and turnarounds for famous names that include Twinkies manufacturer Hostess, children’s entertainment chain Chuck E. Cheese and home security company ADT (ADT). The company manages about $300 billion in assets. While payouts dipped in response to the initial wave of the pandemic’s economic disruption, the most recent distribution of 49 cents per share is just a penny below where payouts were at the end of 2019 — a good sign business has stabilized, and that the generous dividend for shareholders will continue.
Current yield: 4.1%
Ares Management Corp. (ARES)
While some investment managers pulled back on dividend payouts in early 2020, ARES increased its monthly distributions from 32 cents to 40 cents a share. That’s in part because of its strength as an “alternative asset manager,” offering various types of investment funds largely for institutional investors that look far beyond the typical lineup of index funds. Ares is adept at finding off-the-beaten-trail opportunities, particularly in debt markets that offer steady payments into its coffers — which in turn support the company’s generous dividends to its shareholders.
Current yield: 4%
Fidus Investment Corp. (FDUS)
Fidus is an asset manager with a lower profile, but its dividend yield is simply amazing. FDUS has a market capitalization of about $250 million, which is relatively modest compared with the other giants on this list. Its specialized business focuses largely on senior debt and financing for transactions including change of ownership and strategic acquisitions. Fidus also offers “mezzanine” financing that allows FDUS to convert its debt into an equity stake if things go well. Thanks to this unique business model and a bias toward a few sectors it knows well, like aerospace and defense, this asset manager has carved out a nice niche for itself. Shares have more than doubled from their spring 2020 lows. With its big dividend, FDUS is worth a look for income-hungry investors interested in financial stocks.
Current yield: 11.5%
FS KKR Capital Corp. (FSK)
FS KKR admittedly sounds like alphabet soup, but long-time market watchers may recognize the KKR abbreviation for Kohlberg Kravis Roberts — one of the biggest and most storied investment firms on Wall Street. Though a discrete investment firm in its own right, FSK was created by a merger between FS Investment Corp. and a credit arm of KKR to form one of the largest business development companies on Wall Street at the end of 2018. Its business is largely senior secured debt — meaning obligations that get paid first, and debt that is backed up by collateral. This combination of scale, experience and quality credit investments makes FSK tailor-made to provide consistent and generous dividends.
Current yield: 15.2%
Janus Henderson Group (JHG)
Founded in 1934, Janus is a big name in asset management with a long history of success. Its business model currently focuses on institutional and high-net-worth clients. While it does offer some retail-focused offerings, its primary focus remains on mutual funds. It has not made as big of a push into exchange-traded funds as other names on Wall Street. Still, its business of investing in equity and fixed-income markets on behalf of clients is thriving, and the company’s global focus allows it to find new customers everywhere from the U.S. to the U.K. to Australia. Unlike other stocks that have seen cutbacks, JHG’s dividend has remained consistent at 36 cents per share each quarter throughout the last year. Shares for JHG have surged almost 100% from their 2020 lows to prove the business quickly got over the initial disruptions of the pandemic.
Current yield: 6.8%
Prospect Capital Corp. (PSEC)
Recently highlighted as one of the most generous monthly dividend stocks, PSEC has a tremendous double-digit yield coupled with a reliable schedule of payments every 30 days or so. In fact, Prospect has been paying 6 cents in dividends to shareholders every month like clockwork since 2017. That’s a strong track record in any environment, let alone during a pandemic when some of its peers rolled back dividend plans. The business of PSEC is driven by direct stakes in a diverse portfolio of investments that includes payday loan company ACE Cash Express, freight firm GlobalTranz Enterprises and dental services firm InterDent, to name a few.
Current yield: 14%
Waddell & Reed Financial (WDR)
Though perhaps not a big name, the $1 billion Waddell & Reed is significantly established. And with a consistent payout of 25 cents each quarter, it’s also more reliable than some of its peers when it comes to its income potential. WDR provides investment management services that include underwriting and advisory services, as well as shareholder services administration. That means it serves other financial firms that have mutual funds and other offerings in their portfolio but prefer to outsource some of the logistics and regulatory red tape around these investment vehicles. The company also distributes investment products through its wholesale channel comprising brokers, dealers and investment advisors. This diversified model is part of the reason WDR has weathered the ups and downs of 2020 better than other firms, and why it continues to pay reliable and generous dividends.
Current yield: 6.4%
Asset management stocks to buy for income:
— AllianceBernstein Holding (AB)
— Artisan Partners Asset Management (APAM)
— Apollo Global Management (APO)
— Ares Management Corp. (ARES)
— Fidus Investment Corp. (FDUS)
— FS KKR Capital Corp. (FSK)
— Janus Henderson Group (JHG)
— Prospect Capital Corp. (PSEC)
— Waddell & Reed Financial (WDR)