Is Premier Asset Management a worthy addition to your portfolio?

Screening for companies with strong balance sheets and solid dividend yields can be a quick and simple way of identifying potentially high-quality investments that might be attractively priced. One way of doing might be to include stocks that have a Piotroski F-Score of 8 or 9 and a dividend yield of at least, say, 3%.

Take Premier Asset Management (LON:PAM), for example, which is a small cap adventurous style neutral company in the Financials sector. Premier Asset Management pays out a rolling 5.14% of its share price in dividend payments.

Does Premier Asset Management pass our F-Score test?

Stockopedia applies algorithms to its stream of financial data to automatically calculate the Piotroski F-Score for every stock on the market. It shows that Premier Asset Management scores 8 out of a possible 9. 

By investing in companies scoring 8 or 9 by these measures, Piotroski showed that, over a 20-year test period through to 1996, the return earned by a value-focused investor could be increased by an astounding 7.5% each year. Even better, it suggests that the company is well-placed to continue to pay out attractive dividends.

Prospects for Premier Asset Management

Perhaps we can see why this is by looking at the company's most recent financial results. For the fiscal year ended 30 September 2018, Premier Asset Management Group PLC revenues increased 16% to £53.4m and net income increased 41% to £12.5m, helped along by a decrease in amortisation and exceptional costs.

Premier Asset Management's improving financial condition, reasonable yield, and decent results justify further analysis. One initial point of concern, though, might be the group's relatively thin dividend cover of just 1.16 times historic earnings.

What does this mean for potential investors?

Premier Miton has an F-Score that suggests it could be a promising investment candidate worthy of further research - but it's only a first step. Higher F-Score stocks can still have weaknesses and may trade at premium prices compared to other stocks. We've identified some areas of concern with Premier Miton that you can find out about here.