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Flow Traders: A Portfolio Hedge That Pays Fat Dividends

Published Wed, 16 Dec 2020 17:01:16 -0500 on Seeking Alpha

Seeking AlphaDividend Ideas | Financials  | NetherlandsFlow Traders: A Portfolio Hedge That Pays Fat DividendsDec. 16, 2020 5:01 PM ET|| About: Flow Traders N.V. (FLTDF), Includes: BGCP, CFNCF, VIRT, VXXby: Silver Coast ResearchSilver Coast Research Small-cap, foreign companies, Commodities, Dividend InvestingSummaryDutch fintech Flow Traders N.V. thrives when financial market volatility is elevated.
After a strong H1 '20, Flow Traders' stock price has given back some gains, as volatility receded and optimism returned to the market.
With greed reaching extreme levels, now is the time to consider Flow Traders again, in anticipation of a return of volatility.
The company has a generous dividend policy in place (>50% of net result). A €4/share interim dividend (15% yield at the current share price) was paid out in the summer on the back of the strong H1 performance.
Insiders have increased their holdings in recent months.
As a liquidity provider, Dutch fintech Flow Traders (OTCPK: FLTDF) benefits from periods of volatility in the markets, during which high volumes of financial products such as ETFs are traded. In the midst of the stock market rout in March, the stock appreciated sharply, effectively acting as a hedge for investors.
Market participants have a short memory, though, and with optimism and even greed on the rise in recent months, the stock has given back a good chunk of its gains. This is precisely when Flow Traders is worth a look, either for immediate entry - I consider the current share price attractive - or to put on a watchlist while waiting for even more complacency in the markets. Importantly, Flow Traders pays a variable dividend at least equal to 50% of net income, which can translate into exceptionally high distributions when market conditions are favorable (€4/share was paid in relation to H1 '20 - a 15% yield at the current share price).
Note: Ideally, the stock should be bought on Euronext Amsterdam (under the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
BGC PARTNERS 5.68   11.4 0.50 0.56 9.98