Looking for a combination of major upside potential and a great dividend yield?
If you said yes to both, then the ASX All Ords stock in this article could be for you.
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Which ASX All Ords stock?
The stock in question is Regal Partners Ltd (ASX: RPL).
It is a specialist alternative investment manager that was formed in 2022 following the merger of Regal Funds and VGI Partners. Regal Partners manages a broad range of investment strategies covering long/short equities, private markets, real and natural assets, and credit and royalties on behalf of institutions, family offices, charitable groups, and private investors.
Bell Potter is recommending the ASX All Ords stock as a buy following the release of its quarterly update. Commenting on the quarter, the broker said:
From our bottom-up analysis of the funds, we estimate that RPL generated around $34m of performance fees in Q3. The business is well on track to meet our expectations – depending upon the performance in Q4. We have not yet seen the returns to the end of October, and we would note that markets have given up some gains in the last couple of weeks.
Big returns
In response to the update, the broker has reaffirmed its buy rating and $4.85 price target on the ASX All Ords stock.
Based on its current share price of $3.56, this implies potential upside of 36% for investors over the next 12 months.
But the returns won't stop there. Bell Potter expects Regal Partners to reward its shareholders with a growing stream of dividends.
It is forecasting fully franked dividends of 16.3 cents per share in FY 2024, then 18.1 cents per share in FY 2025, and finally 21.7 cents per share in FY 2026. This implies potential dividend yields of 4.55%, 5.1%, and 6.1%, respectively.
This boosts the total potential 12-month return beyond 40% for investors.
Overall, the broker believes that the ASX All Ords stock's quarterly performance was supportive of its investment thesis and continues to urge investors to hit the buy button. It concludes:
This analysis of performance fees is supportive to our investment case, although at this juncture we have not changed our estimates, valuation or recommendation. Regal continues to benefit from strong investment performance, which in turn drives performance fees and positive net flows into its funds. It has benefitted from the increased scale gained through recent acquisitions.
We believe it is well placed to acquire Platinum Asset Management (PTM, HOLD PT $1.21/sh), and should it do so, there is upside from increased scale and revenue, as well as improving investment performance. With the recent pull back in markets, the shares have dropped from a recent high of $3.94/sh to $3.56/sh, which we believe offers an opportunity to buy the shares.
