Westwood Holdings Group Offers Shareholders 4.6% Dividend Yield (WHG)
By: Ned Piplovic,
Westwood Holdings Group, Inc. (NYSE:WHG) continues to provide its shareholders with rising annual dividends like it did over the past 15 years and the firm’s current payout is equivalent to a 4.6% dividend yield.
While the company’s share price did pull back with the overall market decline during February 2018, the share price still delivered a one-year gain of more than 7% and combined with the rising dividend income for a double-digit percentage total return on shareholders’ investment over the past 12 months.
The February 2018 price decline drove the share price below the 200-day moving average (MA) and the 50-day MA. However, since resuming its uptrend at the beginning of March 2018, the share price has crossed back above the 50-day MA and continues to close in on the 200-day MA. Additionally, the 50-day MA has reversed its falling trend and has been rising again since the beginning of May 2018.
While these indicators are still very early, investors looking to get in on the action ahead of risk averse investors should do their own due diligence to determine whether the current risk might be worth potential returns over the near term. In the affirmative case, investors who chose to do so should take advantage and lock in eligibility for the upcoming July 2 dividend pay date by taking a position prior to the company’s ex-dividend date on June 7, 2018.
Westwood Holdings Group, Inc. (NYSE:WHG)
Based in Dallas, Texas, founded in 1983 and publicly traded since 2002, the Westwood Holdings Group, Inc. manages investment assets and provides wealth management services for its clients through two business segments – Advisory and Trust. The Advisory segment provides investment advisory services to corporate and public retirement plans, endowments, foundations, individuals and the Westwood Funds. Additionally, the firm provides investment sub-advisory services to mutual funds, pooled investment vehicles and its Trust segment. The Trust segment offers trust services, custodial services and participates in common trust funds that it sponsors to institutions and high net worth individuals. As of March 31, 2018, the firm had $22.6 billion in assets under management. In addition to its Dallas headquarters, the Westwood Holdings Group has offices in Houston, Boston and Toronto.
The company’s share price achieved its 52-week low early in its trailing 12-month period and started with a five-month rising trend. From its 52-low of $54.15 on May 30, 2017, the share price ascended nearly 31% to reach its 52-week high of $70.84 on October 30, 2017. After reaching its current peak for the past year, the share price pulled back slightly and traded sideways mostly in the $65 to $68 range over the following 90 days.
During February 2018, the share price fell more than 20% and closed on February 28, 2018, at $54.35, which was just 0.35% above the 52-week low from May 30, 2017. Since the February drop, the share price climbed back to close on May 25, 2018, at $59.50, which is a gain of almost 9% but still 16% short of the January peak. However, the May 25 closing price was 7.2% higher than one year earlier, nearly 10% higher than the 52-week low from May 2017 and almost 40% higher than it was five years ago.
The company’s current $0.68 quarterly dividend distribution is 9.7% higher than the $0.62 payout from the same period last year. This new quarterly dividend amount currently yields 4.6% and is equivalent to a $2.72 annualized payout.
The company’s current 4.6% dividend yield is 23.6% higher than Westwood Holdings Group’s 3.7% average yield over the past five years. Additionally, the company’s current yield is 46% above the 3.13% average yield of the entire Financials sector and more than 30% higher than the 3.5% average dividend yield of the Asset Management subsegment, which generally has some of the highest average yields of any segment.
The Westwood Holdings Group started distributing dividends when the company went public in 2002. Since then, the company advanced its total annual dividend 34-fold, which corresponds to a 24.7% average annual growth rate. However, the $0.08 annualized dividend for the first year is very low and skews the growth number. Looking at the total dividend growth of nearly 140% and an average rate of 9% per year over the past 10 years provides a more realistic dividend growth picture.
The combined benefit of the rising share price and advancing annual dividends rewarded shareholders with a total return of nearly 12% over the past 12 months, a total return of almost 18% over the past three years and a 65% total return over the past five years.
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