Dividend distribution is corelated with the financial performance of the business. When a company makes decent profits and is able to sustain its profitability over the years, the Board of Directors choose to declare dividends to its respective shareholders. We will be discussing a few businesses within the small cap space, which has declared dividends in the recent past or has the potential to distribute dividends to its shareholders.
Let’s go through such small-cap stocks to gain a better insight on them.
Emeco Holdings Limited (ASX:EHL)
Emeco Holdings Limited operates in selling, renting and maintaining heavy earthmoving equipment to customers in the mining industry across Australia and other countries.
Increase of Revolving Credit Facility limit: On 8 January 2020, EHL notified that it has implemented documentation with its current syndicated lenders to expand its Revolving Credit Facility from $65 million to $100 million. The raised facility offers cost-effective debt with boosted liquidity and flexibility for the business. EHL continues to be committed to its deleveraging approach, with leverage anticipated to be 1.5x by the close of financial year 2020 and aiming 1.0x by the close of next year.
FY19 Operational Highlights FY19: EHL declared its full year results, for the period closed 30 June 2019, wherein the company reported operating EBITDA at $214 million, up 40% on y-o-y basis while the company’s operating EBITDA margin stood at 46.1%, up by 590 bps on y-o-y basis. The company reported operating EBIT was at $125.4 million, increased 51% on y-o-y basis. Operating NPAT, during the year came in at $63.1 million, increasing by 214% from FY18. The company reported total debt of $463.6 million as compared to $480.2 million in FY18. The company reported a high Net debt to Operating EBITDA at 2 times, which has improved from 2.62 times in FY18.
It is anticipated that the company is not paying dividend because of the extra debt in its balance sheet. The Management might be focusing on reducing its debt from its profitability. Thus, investors might keep this stock in their list in order to earn dividends in future.
FY19 Financial Highlights (Source: Company’s Report)
Stock Update: The stock of EHL last quoted flat at $2.210, as on 09 January 2019. At current market price, the stock is quoting towards the upper band of its 52- week trading range of $1.625 to $2.895. The stock has generated positive returns of 16.62% and 5.74% in the last three months and six months, respectively. At current market price, the stock is available at a price to earnings multiple of 19.63x on its trailing twelve months (TTM) basis.
GWA Group Limited (ASX: GWA)
GWA Group Limited is the supplier of building fixtures and fittings used for the residential and commercial premises. The range of products includes sanitaryware and bathroom products, baths, tapware, sinks and laundry tubs.
FY19 Financial Highlights for the period ended 30 June 2019: GWA declared its full-year results wherein, the company reported revenue of $381.7 million, up 6.4% on y-o-y basis. The company reported EBITDA at $82.3 million in FY19, increasing 2.7% on y-o-y basis. The company reported NPAT of $51.8 million, up 3.2% on y-o-y basis.
During the year the company acquired Methven, which has enhanced its presence in renovation and replacement division, taps & showers and select global markets. Operating cash flow came in at $94.2 million, up 64.4% on y-o-y basis. During the year, the company announced a dividend of 18.5 cents per share, depicting an increase of 2.8% on y-o-y basis.
FY19 Income-statement Highlights (Company’s Report)
Investors may choose to look for this stock within the small cap segment in order to get good dividend yield.
Stock Update: The stock of GWA last traded at $3.415, up 1.335% as on 09 January 2020. The stock has generated a decent return of 18.25% in the last one year. At current market price, the stock is available at a price to earnings multiple of 9.36x on TTM basis. The stock has delivered an annualised dividend yield of 5.49%.
AMA Group Limited (ASX: AMA)
AMA Group Limited works in the wholesale vehicle aftercare and accessories segment, which includes smash repair shops, automotive and electrical components followed by vehicle protection bull bars and other servicing workshops for brakes and transmissions.
Recently, the company reported a change in interests of its substantial holder CDAM Limited (UK), effective from 30 December 2019, by increasing its voting rights to 6.01%.
FY19 Financial Highlights: AMA reported its full year results for the duration closed on 30 June last year, wherein the company posted revenue on reported basis at $616.174 million, up 20.9% on y-o-y basis. The company’s reported EBITDA came in at $50.127 million, up 14.9% from FY18. NPAT and EBIT for FY19 came in at $21.715 million and $33.919 million. During FY19, the company paid total dividend of $13.5 million.
In the recent past, the company showed a decent growth and is expected to continue the momentum in coming years. Investors can choose to include the stock in its portfolio in order to earn decent dividend yield in coming years.
Stock Update: The stock of AMA last traded at $0.950, up 1.064% as on 09 January 2020. AT current market price, the stock has generated a dividend yield of 2.93% on an annualised basis. The stock last traded at the lower band of its 52-week trading range of $0.822 and $1.512. The stock has generated negative returns of 28.24% and 29.69% in the last three months and six-months, respectively. The stock is available at a price to earnings multiple of 23.5x on TTM basis.
SG Fleet Group Limited (ASX:SGF)
SG Fleet Group Limited is associated activities related to fleet management, vehicle leasing and such.
FY19 Financial Highlights for the Period ended 30 June 2019: SGF reported its full year financial results, wherein the company reported revenue at $509.722 million as compared to $515.207 million in FY18. The company reported net profit of $60.462 million as compared to $67.455 million in previous financial year. Fleet management costs stood at $86.637 million as compared to $84.112 million in FY18. Technology costs stood at $7.872 million as compared to $7.102 million in FY18. The Management has announced a dividend of 9.520 cents per share holder.
Investors may expect the same rate of growth in the coming years, followed by the same rate of dividend per equity share.
Stock Update: The stock of SGF last traded at $2.520, up 0.8% from its last close, as on 09 January 2020. The stock has generated mixed returns of 3.73% and 20.38% in the last three months and six months, respectively. At current market price, the stock is available at a P/E multiple of 10.78x on its TTM basis. At current market price, the stock has generated an annualised yield of 7.07%.
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