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Why High-Yield Dividend Stock UBS Group Could Be A Buy

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August 30, 2016 – Comments (0) | RELATED TICKERS: UBS , BAC , C

UBS is a $37 billion revenue-generating machine providing financial services to high net worth individuals and institutions throughout the world. 

What makes UBS different from many others is that 50% of it business comes from fees from private wealth management. Investment banking accounts for 27% of all revenues while commodity banking services for personal and corporate clients contributes 15%. Asset management for corporate benefit plans takes up the remaining 8%. 

In its core private wealth business, UBS has a loyal following among the world's wealthiest families. It takes about $10 million just to open a private bank relationship. Monthly fees are based on assets under management and do not vary greatly year to year. 

Approximately 80% of its core income comes from recurring fees. UBS does not seek the highest absolute investment returns. Most clients are more concerned with capital preservation. This means that UBS enjoys some stability in its business. 

UBS stock has fallen over 28% in 2016, pushing its $0.63 per share dividend to a yield of 4.5%. Dividend payments are limited to once a year so investors needing more frequent income will find their needs better met elsewhere. 

UBS cut its dividend during the financial crisis and only recently began making payments again. Financial stocks usually employ a lot of leverage, which can make them riskier investments during recessions. As well, banks with heavy European exposure are being hit hard today, so investors should proceed with caution. 

Read more about the corporate fundamentals and the dividend history of UBS and their major competitors...

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