As a full time micro cap investor I’m always attracted to growth companies that also pay a meaningful dividend. Growth is what drives a stock price, but dividends provide at the very least a perceived floor as long as the company is fundamentally sound. In uncertain times investors look for certainty or companies that literally put cash back in your pocket. Here are three micro cap growth stocks that pay a meaningful dividend.
The Cash Store (CSFS), $8.80 PPS, $154 million market cap, 5.4% Dividend Yield: The Cash Store is a leading provider of alternative financial products and services in Canada with a growing presence in the UK. It acts as a broker to facilitate short-term advances and provide other financial services. The company provides various alternative financial products, including payday loans, signature loans, check cashing, injury loans, prepaid Mastercards, money transfer services, prepaid phone cards, title loans, payment protection plans, and various bank accounts. The company has grown its branches from 100 in 2004, to 400 in 2009, and as of Sept 2011, the company owned/operated 574 branches in Canada a 8 in the UK. Total Loans Brokered have grown from $70 million in 2004 to $836m in 2011. The company also owns an 18% interest in The Cash Store Australia (AUC.v) which operates 81 branches in Australia, and a 15% ownership stake in RTF Financial Holdings (a text message lending platform). In the LTM from 06/30/2011 the company had revenues of C$196 million with adjusted EBITDA of C$54 million. In Canada the company plans to add 30 new branches per year from todays 574 total branches. New Canadian branches on average take about a year to become profitable. In the UK the company plans to add 80 new branches per year from todays 8 total branches. New UK branches take 3 months to breakeven. In Australia (through its partner), the company expects to expand to 300 branches by 2014 (currently has 81 branches total). The Cash Store is a good growth story with a strong dividend yield of over 5%. [Company Presentation]
TESSCO Technologies (TESS), $14 PPS, $109m market cap, 4.2% Dividend Yield: TESSCO architects and delivers, with innovation, productivity and speed, the product and value chain solutions to organizations responsible for building, operating and maintaining wireless voice, data and video systems. TESS is a wireless equipment provider that has a history of long-term growth. The company estimates that earnings per diluted share for fiscal 2012 will range from $1.80 – 2.10. The company has a very strong balance sheet with a book value of over $11 per share. This summer TESS increased its quarterly dividend by 50% from $.10 to $0.15. [Company Presentation]
Psychemedics Corp (PMD), $9 PPS, $47m market cap, 5.2% Dividend Yield: Psychemedics is the world’s leading drug testing company using hair for the detection of drugs of abuse. Psychemedics has been successfully operating for 25 years and thousands of corporations worldwide currently rely on Psychemedics’ proprietary hair analysis technology for their pre-employment and employee drug screening. Psychemedics’ clients include over 10% of the Fortune 500, some of the largest police departments in America and six Federal Reserve Banks. The company just reported a 23% increase in revenues and a 34% increase in net income. The company has a 15 year (61 quarters) history of paying a dividend.
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