I’m hungry to add another top FTSE 100 income stock to my portfolio, and Schroders (LSE: SDR) is jumping up and saying ‘Buy Me!’. Should I listen?

The family-controlled fund manager now has a brilliant trailing yield of 6.99%. That’s well above the FTSE 100 average of around 3.5%. At that rate I’d double my money in just over a decade, even if the share price didn’t rise at all. Imagine if it did!

Actually, that’s pretty hard to imagine right now, because the Schroders share price has been tanking for years. 

Schroders’ shares should carry a wealth warning

Today, it trades at a 52-week low after dropping 20.05% in the last 12 months. But this is no one-off slump.

Ten years ago Schroders’ shares traded at 426p. They’re down almost 28% since at today’s 308.8p. That’s a 10-year low. I’ve been tempted to buy the stock at various points in that time, and I’m glad I resisted. Is this finally my moment?

The latest downward lurch (10% in a month!) followed results published on 5 November, which showed Q3 outflows hitting £2.3bn.

That marked a sharp reversal on the first nine months of the year, when the group enjoyed net flows of £1.6bn. A positive stock market and strong investment performance drove assets under management to a record £777.4bn.

That’s faded now, partly down to market volatility in China. I’m seeing the impact of Beijing’s troubles across my portfolio, with Burberry and Glencore the most glaring examples.

Schroders can’t catch a break. Its asset management operations posted growth in private markets, only to see it wiped out by foreign exchange fluctuations. It faces a further £8bn outflow in Q4, when a legacy Scottish Widows mandate ends, plus another £2bn in notified outflows from other clients.

It still hopes to win between 5% and 7% of net new business growth while chief financial officer Richard Oldfield is looking to “build greater commercial discipline and drive efficiencies through simplification and flawless execution”. Sounds easy enough.

A tough time for FTSE 100 financials

In defence of Schroders, most FTSE 100 financials have had a rough year. I hold Legal & General Group and M&G. Their shares are down 1.71% and 4.27%, although that’s nothing on the scale of Schroders. They yield 9.33% and 10.10% respectively, so the income’s bigger too.

Schroders has a good dividend track record though. It hasn’t cut shareholder payouts for more than 30 years. Since 2004, they’ve risen by an average of 9.8% a year. That continues as this chart shows.

Chart by TradingView

Schroders looks reasonable value, trading at 12.50 times trading earnings. That’s below the FTSE 100 average of 15.4 times. However, the price-to-revenue ratio of 1.7 doesn’t grab me. That suggests I’m paying £1.70 for each £1 of sales.

The 14 analysts offering one-year price forecasts for Schroders have set a median target of 367.4p, some 20.08% higher than today. I suspect those were mostly compiled before the latest dip, when hopes were higher.

Despite its problems, Schroders tempts me. I think stock markets are due a decent run after a bumpy summer, and Schroders could snap back if we get it. I’d buy if I didn’t already hold L&G and M&G.