These days, I see Hargreaves Lansdown (LSE: HL) as a dividend payer and not a growth stock.
But the share price recently started moving higher. So, should I buy now to secure the chunky dividend yield before it’s too late?
An impressive dividend record
If I had spare cash to invest I’d be tempted. There’s a strong dividend record here. The company has raised the payment every year since at least 2017 and even through the pandemic.
City analysts expect a further increase of about 4% for the current trading year to 30 June. And they’ve pencilled in a jump of 11% for next year. That’s impressive. And the multi-year compound annual growth rate for the dividend is running at about 6.5%.
However, after languishing near the same level since early March, the share price started rising at the end of May. Maybe investors are seeing the attraction of that consistent dividend performance.
The stock is in the ballpark of 848p as I write this on 8 June. And at that level, the forward-looking dividend yield is about 5.5% for the trading year to June 2024. But that yield will dwindle the higher the share price goes. Although, there is no guarantee that it will keep going higher.
Nevertheless, in August 2022, the shares were knocking on the door of 1,000p. But over the past year they are up by just over 2%. There’s been volatility, for sure. But opportunities to bag a bargain could diminish if more confidence returns to the stock market
In May, the company released a pleasing third-quarter trading update. Revenue was around 28% higher year on year. And chief executive Chris Hill said net new business came in 14% up.
Looking ahead, Hill acknowledged the continuation of macroeconomic uncertainty. But the improvement in client activity demonstrates that the business is “well positioned” as investor confidence returns.
Can it beat the competition?
However, the company isn’t the only outfit aiming to attract investors. When it comes to buying shares and funds we have many providers to choose between these days. And that’s one of the reasons I believe Hargreaves Lansdown has become a dividend stalwart instead of the high-growth proposition it once was.
Nevertheless, my feeling is the company has a brand that’s trusted by many. And that strength will likely keep the company’s cash flow healthy so that it can maintain a rising stream of shareholder dividends in the years ahead.
Hill said the business had a busy three months of new product launches. There’s a new Cash ISA, three new portfolio funds and an enhanced share exchange service. But the company also reduced the price of its LISA product and made its Junior ISA free.
I think the ongoing development of the overall offering will help keep the business competitive and attractive for investor-clients. So, I’d be inclined to dig in with further research now. And I’d consider making the stock a long-term holding in a diversified portfolio.
