Video of the Week: Lazard (LAZ), An Asset Management Beast


As you might have read about it here, I now do live webinars and certainly have fun doing so. I have been surprised by the positive interest attendees had towards many of my stock picks. This is how I came to the idea of sharing here some of my “Video of the Week”, during wich I go through a company recent news or results and explain why I believe it is currently a good or a bad pick for a dividend investor.

Lazard (LAZ) is an asset management beast like no other! Having 50% of its income coming from asset management and the other 50% from advisory, LAZ can perform during high and low economic times. It has been growing its market shares for the last 10 years and there is more to it!


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00:00 Mike Heroux: Hey, fellow investor, this is Mike Heroux from Dividend Stocks Rocks. I hope you’re doing well today. Welcome to this week Dividend Stock Pick. Today, we’re covering another asset manager, but this one is a little bit different than BlackRock that I’ve covered a few weeks ago. You can retrieve it in the note below. Basically, I wanna talk about Lazard Asset Management. Ticker is LAZ. Lazard is definitely a different beast because 50% of its revenue is coming from asset management and the other 50% is coming from its advisory firm business. Sorry, it’s a little bit hard to say for a French-Canadian.

00:46 MH: So let’s start with asset management. Lazard has been around for over a hundred of years. The company has grown up through several mergers and acquisitions, which is quite ironic because now they’re known for doing that. So Lazard has developed its expertise in real assets, so those assets are not traded on the stock market, they’re more likely like infrastructures, like bridges and tolls on highways and stuff like that. Those assets are hard to invest in if you don’t have the real expertise, if you don’t know how it works and Lazard has been doing that for so many years now that it has become an expert into it.

01:28 MH: A great thing about those type of assets is that they don’t necessarily follow the stock market. I mean when you’re building a bridge, it’s for the next 25, 30, 50 years in front of you, same thing with a toll or any kind of infrastructure. So it’s a long-term play where you already know about your finance stake structures, so you know about your cost because you’re going to issue bonds that will last at least 20 years, and you also have a good idea of what your revenue will look like and your maintenance. So it’s a little bit different than investing in the stock market where any kind of announcement overnight can put the market by up 5% or down the hole and issue a bear market.

02:14 MH: So the other part of Lazard which I found even more interesting is that they’re well-known for their advice in regards to mergers, acquisitions, restructuring plans. So basically when you’re running into a bull market and there are plenty of companies that are looking to do mergers and acquisition, when Lazard will help setting up the deal and they’ll analyze if it’s worth it or not, how you should do it, how you should get your financing. So let’s just say that during your bull market, Lazard guys are very busy. During downturns, during recessions and bear market they are also busy. And this is what I really like about it is because when companies are struggling with their finances, they’re looking for cost-cutting initiative. They’re looking for a restructuring plan, and this is where, once again, Lazard guys are coming into play. So they’re helping out businesses to restructure, to save on cost and to become more efficient and eventually, when thing turns around and now that they’re efficient and making money during the next bull market, guess who they are going to call when they’re making a merger and acquisition? They’re not gonna call Ghostbusters, they’re gonna call Lazard.

03:32 MH: This is why this company has been there for so long, and even during 2008, 2009, 2010 when several asset manager got hit, their stock price got hit as well, but what was really interesting is that they were gaining market shares during that time. So that means that the quality of their service is better than a lot of their peers and they have been growing their market shares for the past 10 years. So, I’m not really afraid to pick up shares of Lazard right now even though we’re at the summit of the bull market ’cause even then, even if it start dropping, they will do well in the end.

04:17 MH: Right now, the stock price is slightly under 50 bucks. It’s a very good timing right now. There’s a bit of a wrought over asset manager. If you look at BlackRock, if you look at Invesco, most of them they are losing a few dollars on the market mostly because investors are worried about asset under management not growing fast enough, but remember half of Lazard business is not about managing assets, so you don’t have to really mind about that.

04:50 MH: The other point that is very interesting about Lazard is its dividend growth profile. The company is currently showing a double digit dividend growth rate for the past five years. And on top of that, around February, you get another candy because on top of being a nice 3%, 3.5% yield on a quarterly basis, Lazard also reward investors with a special dividend that is paid in February. In 2008, it was $1.30 per share, which is about 2.5% dividend paid right up front.

05:31 MH: So if you’re looking for a financial stocks paying 3% as a base and then a potential of getting 5% to 6% yield each year on top of great growth performance and perspective, I think Lazard could be a very great pick right now, especially under 50 bucks. At DSR, we value it at over $60 right now, so there’s a good chance that the stock will go up in the upcoming months. Once again, this is not a stock recommendation, this is not a financial advice. I am not your broker or your financial adviser; therefore, you cannot sue me or sue DSR if you’re losing money by picking shares of Lazard or any other companies that you hear me talking about. But in the good side of things, you just have to thank me and you don’t have to pay me a dime if you’re making some money.

06:24 MH: So don’t forget to subscribe to my news channel right below and to go to Dividend Guy Blog, the to register to my newsletter as well. The link is right on the note below. So in the meantime, happy investing and take good care.

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