Macquarie Group Ltd (ASX: MQG) shares, Magellan Financial Group Ltd (ASX: MFG) shares and Platinum Asset Management Limited (ASX: PTM) shares pay good dividends to shareholders.
Why consider these finance shares?
It sounds a like a strange thing to do: invest in shares of companies that invest in shares of companies. However, shares in these three 'fund managers' could offer great returns to investors savvy enough to buy them at the right price. They also pay handy dividends.
Magellan
Magellan is a Sydney-based fund manager specialising in global shares (also called equities). Its two leading investment strategies are 'Global Equities' and 'Infrastructure'. Investors can access pooled funds which follow these strategies by using ETFs or going directly to the company. Magellan makes money by charging a management fee and performance fee (if it outperforms a target) for running the strategies. Magellan's long-term track record is impressive, but it recently hit a soft patch, so its performance fees fell.
Magellan shares pay a dividend of 3.8%.
Platinum
Platinum is another Sydney-based fund manager, with its founder a significant shareholder and still heavily involved in the business. Platinum has come under pressure lately for soft performance. However, it remains a very compelling business, and with its share price down 18% in a year, it appears worthy of further research. It offers a 5.8% fully franked dividend.
Macquarie Group
Macquarie is not only a fund manager but a diversified investment bank. The company is involved in many different facets of financial markets, from funds management to asset finance and mortgages. Similar to Magellan and Platinum, Macquarie's profits can bounce around year-to-year depending on financial markets. However, the company has an attractive business model for the long-term. It offers a 4.7% partially franked dividend.
Foolish Takeaway
There's a reason finance professionals dream of working (or owning!) a funds management business. It's because they can make massive profits by investing other people's money. Fortunately, with companies like Magellan, Platinum and Macquarie listed on the ASX we too can take part in owning a funds management business.
If I were to choose one of these three companies, it would be Macquarie followed closely by Platinum.
