Published Thu, 11 Oct 2018 08:45:00 -0400 on Seeking Alpha
Hargreaves Lansdown (OTCPK: HRGLF, OTCPK: HRGLY) is a name we’ve all heard of. It’s the dominant leader of the investment platform market and it’s 40% market share is about four-times that of its largest competitor.
Despite its size, it’s still growing quickly with a ten-year dividend growth rate of almost 17% per year. That’s impressive, but perhaps more impressive is the company’s astronomical 70% average ten-year return on capital employed.
In fact, Hargreaves Lansdown is so profitable that the FCA have launched an investigation into the competitiveness of the investment platform market (although I guess those two facts could be unrelated).
Hargreaves Lansdown’s massive growth and profitability are extremely attractive features, but that attractiveness has driven the share price up and the dividend yield down, and today the company’s dividend yield is well-below 2%.
For some income investors a sub-2% dividend yield will be unacceptable, and that includes me. But perhaps I’ll make an exception for a company as exceptional as Hargreaves Lansdown?
Can results like this justify a sub-2% dividend yield?
You can read my full review of Hargreaves Lansdown from this month’s Master Investor magazine below:
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