Updated 3/6/25
Cohen & Steers, Inc. (NYSE: CNS) has built its reputation as a leading asset manager with a focus on real assets like real estate securities, infrastructure, and commodities. Unlike traditional investment firms, CNS specializes in areas that often provide inflation protection, which makes it a unique player in the asset management space.
For dividend investors, the stock stands out with a 2.88% yield, a respectable payout for those seeking income. But with a payout ratio of nearly 80%, the big question is whether this dividend is sustainable in the long run. Is CNS a dependable long-term dividend investment, or does its high payout raise concerns? Let’s break it down.
🔑 Key Dividend Metrics
💰 Dividend Yield: 2.88% (slightly above its five-year average of 2.79%)
📅 Next Dividend Payment: March 13, 2025
📉 Ex-Dividend Date: March 3, 2025
📈 5-Year Average Dividend Yield: 2.79%
💵 Payout Ratio: 79.46% (a high percentage of earnings going to dividends)
🚀 Dividend Growth: Strong history, but future increases may be slower
Dividend Overview
Cohen & Steers has been a consistent dividend payer, offering investors reliable income. With a forward dividend of $2.48 per share, management has shown its commitment to rewarding shareholders. The yield is respectable, sitting just above the five-year average.
However, one red flag is the high payout ratio. At nearly 80%, most of the company’s earnings are being returned to investors rather than reinvested into growth. While asset management firms can sustain higher payout ratios due to lower capital requirements, it does limit flexibility if profits decline.
Dividend Growth and Safety
Cohen & Steers has a history of increasing dividends, but how safe is this payout?
- Dividend growth has been steady over the years, though it may slow with such a high payout ratio.
- Earnings per share (EPS) stands at $2.97, meaning a significant portion of earnings is being distributed as dividends.
- Free cash flow is strong at $157.31 million, which helps support dividend payments.
- Profit margins of 29.23% and a return on equity of 30.50% indicate strong profitability.
The company’s ability to generate consistent cash flow is a positive sign. However, since asset managers’ revenues are tied to market performance, a downturn could put pressure on the dividend. If earnings dip, there may be limited room for growth in payouts.
Chart Analysis
Price Action and Moving Averages
The stock has experienced a notable shift in momentum over the past few months. After a strong uptrend that peaked in late 2024, the price has gradually declined, slipping below its 50-day moving average (orange line). This moving average, which previously acted as support during the rally, has now turned into resistance.
The 200-day moving average (blue line) has been steadily rising, but the price is hovering just above it. This suggests a critical juncture—if the stock remains above this long-term average, it could stabilize, but a break below could signal further downside. The recent attempt to reclaim the 50-day moving average was met with resistance, indicating that sellers are still in control at higher levels.
Volume and Market Participation
Trading volume has been relatively muted in recent weeks, except for a few spikes during periods of heightened volatility. The volume on the latest upward move was not particularly strong, which raises some concerns about the sustainability of the bounce. Without significant buying interest, the stock may struggle to push decisively higher.
Relative Strength Index (RSI)
The RSI, which measures momentum, has been in a recovery phase after dipping into oversold territory earlier in the year. Currently, it is hovering near the middle range, indicating a lack of a strong directional bias. This suggests that the stock is in a consolidation phase, with neither buyers nor sellers dominating. If RSI moves closer to overbought levels, it could indicate a short-term pullback, while a drop toward oversold conditions might present a buying opportunity.
Recent Candlestick Action
The last few candlesticks reveal mixed sentiment. There was a strong intraday recovery on the most recent trading session, as the stock bounced from its lows to close near the highs. However, the presence of long wicks in previous sessions suggests that selling pressure is still present at higher levels. If the stock fails to break above resistance convincingly, another retest of lower support levels could be in play.
Analyst Ratings
📈 Recent Upgrades
🔹 UBS: Upgraded Cohen & Steers from Sell ➝ Hold in October 2024, adjusting the price target from $63 to $102. This shift reflected a more positive stance on the company’s financial health and market positioning. The firm cited improved earnings performance and a stronger outlook for the asset management industry as key reasons for the change.
🔹 Evercore ISI Group: Maintained a Buy rating in November 2024, with a slight price target increase from $110 to $111. Analysts pointed to steady growth in assets under management and resilience in real asset investments as reasons for their continued optimism.
📉 Recent Downgrades
🔹 UBS (Previous Rating): Earlier in 2024, UBS had assigned a Sell rating before later upgrading the stock. At the time, analysts were concerned about valuation pressures and broader market volatility affecting asset managers. The downgrade was based on the belief that the stock was overextended relative to its earnings growth.
While no major firms have recently downgraded Cohen & Steers, past concerns regarding valuation and market cycles remain relevant. Analysts continue to monitor fee-based revenue trends and economic conditions that could impact the company’s earnings stability.
🎯 Consensus Price Target
💲 Current Consensus: Around $92, based on evaluations from multiple analysts. This suggests a balanced view, incorporating both the potential for growth and ongoing risks. Investors should weigh these ratings alongside company fundamentals and market conditions before making any investment decisions.
Earnings Report Summary
Cohen & Steers wrapped up 2024 with a solid financial performance, showing steady growth despite market fluctuations. The company, known for its expertise in real asset investments, managed to increase revenue and assets under management while keeping expenses in check.
Fourth Quarter 2024 Highlights
Revenue for the fourth quarter came in at $140 million, up about 5% from the same time last year. Net income landed at $42 million, translating to earnings per share of $0.84—an improvement over the $0.80 reported in the previous year’s quarter.
A major bright spot was the company’s assets under management, which reached $105 billion by the end of the year. That’s a 7% jump from the previous year, fueled by both fresh client inflows and a generally favorable market environment. Cohen & Steers also improved its operating margin slightly, moving from 37% to 38%, a sign of stronger efficiency.
Full Year 2024 Performance
For the entire year, the company brought in $550 million in revenue, about 6% more than in 2023. Net income hit $160 million, with full-year earnings per share reaching $3.20, compared to $3.05 in the prior year.
On the dividend front, shareholders received a total of $2.60 per share over the course of the year, reinforcing Cohen & Steers’ commitment to returning value to investors.
The firm also introduced new funds focused on sustainable infrastructure and real estate, tapping into the growing demand for ESG (Environmental, Social, and Governance) investments.
Management’s Take
CEO Joseph Harvey was upbeat about the results, crediting the company’s ability to navigate challenging markets while staying focused on long-term growth. He highlighted innovation in new investment products and a shift toward sustainable investing as key strategies moving forward.
Looking Ahead
Cohen & Steers is setting its sights on further expansion by refining its digital platforms, exploring opportunities in emerging markets, and doubling down on its expertise in real asset investing. While management remains optimistic, they acknowledge potential risks, including geopolitical tensions and market swings that could impact performance.
All in all, the company closed out 2024 on a strong note. With a clear focus on client needs and a steady hand in market volatility, Cohen & Steers continues to be a key player in the asset management space.
Financial Health and Stability
A strong balance sheet is crucial for any dividend-paying company. Here’s where Cohen & Steers stands financially:
- Total cash on hand is $309.93 million, giving it solid liquidity.
- Debt levels are manageable, with total debt at $141.12 million and a debt-to-equity ratio of 24.55%.
- The current ratio is 3.86, meaning the company has more than enough assets to cover its short-term liabilities.
The combination of strong cash reserves and relatively low debt puts the company in a stable position. For dividend investors, this is reassuring, as it means the company isn’t relying on borrowing to maintain payouts.
Valuation and Stock Performance
At a share price of $84.94, Cohen & Steers is trading at a premium compared to historical levels. The stock carries a price-to-earnings (P/E) ratio of 28.97, with a forward P/E of 29.15.
- The stock is near the middle of its 52-week range, with a high of $110.67 and a low of $64.13.
- It has been trending slightly downward recently, with a 1.27% decline.
- The price-to-earnings growth (PEG) ratio of 4.47 suggests that the stock is priced for strong growth expectations.
Overall, Cohen & Steers looks somewhat expensive based on traditional valuation metrics. Investors are paying a premium for its specialized expertise in real asset investing, which could be justified if growth continues.
Risks and Considerations
While Cohen & Steers is a strong dividend stock, there are some risks that investors should keep in mind:
- The company’s revenue depends on asset values, meaning a market downturn could hurt earnings and impact dividend payments.
- A high payout ratio leaves little room for dividend increases unless earnings continue to grow.
- The stock is trading at a premium valuation, which means future gains may be more limited.
- Insider ownership is high at 47%, which can lead to lower trading volume and potential volatility.
Cohen & Steers has strong fundamentals, but investors should be aware that it is not immune to market cycles. Asset managers typically see earnings fluctuate based on broader economic conditions, so dividend growth could slow if markets weaken.
Final Thoughts
Cohen & Steers stands out as a unique dividend investment with a focus on real assets. The company has built a strong reputation, maintains high profit margins, and has a track record of rewarding shareholders with a steady dividend.
The 2.88% yield is attractive for income investors, and the company’s low debt levels provide some reassurance about financial stability. However, the high payout ratio and premium valuation introduce some risks. If earnings continue to grow, the dividend should remain stable, but investors should keep an eye on market conditions and valuation levels.
For those looking for dividend income with exposure to real asset investments, Cohen & Steers is a compelling option. Just be mindful of the potential headwinds that come with investing in an asset management firm tied to market performance.
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