Thursday, November 21, 2013

The Rare 33% Dividend Grower

When a stock increases its dividend, it's only a matter of time  
The Rare 33% Dividend Grower
Thursday, November 21, 2013


Editor's Note: Today at 2 pm ET, Andy Crowder and Ian Wyatt host a live teleconference on how to double the income you receive from the dividend stocks you already own. If you haven't signed up yet, you should know there's still time - but it's running short. To make sure you can get through for this live telephone conference, we've set up a special number for you to call. Click here to see this phone number and to reserve your spot now.

 

 

When a stock increases its dividend, it's only a matter of time before the share price jumps.  One overlooked Canadian dividend stock is raising its dividend by 33%. Thanks to the small size of this stock, most investors didn't even notice.

 

This creates a big profit opportunity for investors. And as I'll tell you today, I think this company could raise its dividend considerably higher in the next year.

 

The company is called Supremex (Toronto: SXP), Canada's leading maker of envelopes and labels.  Earlier this month, management announced plans to increase the quarterly dividend by one penny per share. To collect the next dividend, you must own the stock by Nov. 30.

 

With a 16-cent annual dividend, Supremex offers a dividend yield of 7.6%. That's healthy compared with the 2.5% yield from 10-year U.S. Treasury bonds and a 2% dividend yield from the S&P 500.

 

Supremex may sound familiar. That's because I recommended the stock to Income & Prosperity readers on Sept. 20.  At the time, the stock traded at $1.84. Not only has the stock risen 14% since that recommendation, but the dividend has also grown considerably.

 

I love investing in dividend growers.  That's because the stock price is highly correlated with dividend growth. For example, a company that raises its dividend by 10% per year will typically see its shares appreciate at a similar pace.

 

The recent dividend increase from Supremex is significant.  But I think more dividend hikes could be ahead.  Let me explain...

 

The largest shareholder of Supremex is a $125 million investment holding company called Clarke Inc. (Toronto: CKI).  It owns a 45% stake.

 

Earlier this year, Clarke made an offer to buy the rest of the company.  But the directors of both companies were unable to agree on price.  And in August, the discussions were called off.  But Clarke remains a major shareholder that's looking for ways to unlock value from its investment in Supremex.

 

The best way is through bigger dividend payments.  That one-cent dividend increase will put an extra $522,000 in Clarke's bank account every year. 

 

-------Advertisement------

How to fill up your car for free

 

A little-known program, available to every American, now makes it possible to receive regular rebates from the oil and gas industry. In fact, you can collect a Gas Rebate check of up to $310 very soon.

 

Click here for the full story on this program.

-------------------------------

 

Clarke has a history of advocating for much bigger dividends.  In the first nine months of 2013, Clarke has increased its own dividend payments by 300% - from 6 cents a share to 24 cents a share.

 

The investment firm has also successfully advocated for dividend hikes at two of its major holdings: Bonnett's Energy and TerraVest. After each of these dividend increases, the share price has jumped. 

 

A History of Bigger Dividends

 

 

The dividend increase at Supremex is a good start.  But it appears that Clarke could be pushing the Supremex board of directors for even bigger dividends in the coming quarters.

 

With a market capitalization of just $60 million, Supremex is a tiny company.  Even after the recent dividend increase, the company is only paying out around 30% of its free cash flow to shareholders.  That means that there is a considerable opportunity to increase the dividend payments.

 

One well-regarded Canadian investor named Guy Gottfried thinks that Supremex could increase its annual dividend to 24 cents per share. If that happened, the stock would yield 11.4% based on its current share price.    

 

The bottom line is that Supremex has lots of cash flow and the financial means to pay much bigger dividends. With major shareholder Clarke advocating for bigger dividends, the one-cent increase earlier this month could just be the start.

 

Supremex shares rose 8% after the recent dividend increase.  But a bigger move for the stock is likely to happen after a considerable dividend hike.  The time to buy this stock is before that happens.

 

Interested in learning more about Supremex?  You'll enjoy my article: Canada's Warren Buffett is Buying This Stock (just click here).

 

I'll remind you that shares of Supremex are extremely illiquid.  Yesterday, just 5,300 shares traded on the Toronto Stock Exchange (Note - the stock also trades on the OTC exchange in the U.S. with the ticker symbol SUMFX). I highly recommend using limit orders when buying or selling shares of thinly traded stocks like Supremex.

 

Do you like hearing about small and unknown dividend stocks like Supremex?  Please send me an email and let me know what you think.  I'm always looking for feedback and suggestions from Income & Prosperity readers.  My email is editor@incomeandprosperity.com

 

Good investing,

 

Ian Wyatt 

Richmond, Vermont

 

Full Disclosure: I personally own shares of Supremex, and intend to buy more stock.

 

 

 

Further Reading:
 

Canada's Warren Buffett is Buying This Stock

 

When Guy Gottfried takes the podium in front of the world's best value investors, you know something big is about to happen.

 

Over the past few years, Mr. Gottfried has attained a cult-like following only rivaled by legends like Warren Buffett.  That's because he has an uncanny knack for finding DEEP value stocks right before they take off...

 

The last four times he addressed attendees of the Value Investing Congress, you could have made an average of 67% by just by buying his recommended stocks. One is his latest recommendations is Supremex. 
Click here for the full story.

Retire on One Stock

 

Our research team found a stock that pays dividends so big - you can live off them. This cash-cranking company has hiked its dividend 10-FOLD... paying investors like you dividends of $428.57, $913.93, and $924.43! If these ever-increasing payouts sound good to you, click here for all the details.

Popular Analysis from Wyatt Research
 

Wednesday, November 20, 2013
The Latest Sign of a Second Internet Stock Bubble
Silicon Valley is littered with stories of genius college students dropping out to do the tech startup thing. The ones that go bust are rarely heard of. But success stories like Mark Zuckerberg and Facebook (NASDAQ: FB) capture the imagination of capitalists seeking to invest in the next great thing.

 

Tuesday, November 19, 2013
Why Microsoft Needs the Next Marissa Mayer

Steve Ballmer is out as Microsoft (NASDAQ: MSFT) CEO. After 33 years with the software giant, the last 13 spent as its CEO, Ballmer was essentially forced into retirement by Microsoft's board of directors.
 

Monday, November 18, 2013
My Favorite Growth Trend
It's usually a challenge to select one single growth trend that is more powerful than the rest. But that's not the case these days - it has to be the boom in U.S. oil and gas production.

Latest Income & Prosperity
 

Wednesday, November 20, 2013
BDCs: The Perfect Income Investment
The more I vet income investments, the more convinced I am that business development companies (BDCs) are the investment of choice for many income investors.

 

Tuesday, November 19, 2013
A New Opportunity to Double Your Dividend

I'd say it's no stretch to call AT&T (NYSE: T) one of the more reliable dividend-growth and income investment stocks on the market.

 

Monday, November 18, 2013
How a DRIP Helped Pay for My First Home
If there were no such thing as dividend reinvestment programs (DRIPs), I probably would never have been able to afford my first house.

 

Friday, November 15, 2013
QE3 Extension Means Buy Gold and Silver
I'll believe it when I see. I refer to Federal Reserve, quantitative easing, and tapering.

 

Thursday, November 14, 2013
The Bear Call Spread Strategy
Over the past several weeks, the combination of rising stocks and falling bonds has led to an unusual and extreme precedent between the two asset classes.

Disclaimer & Important Information

WyattResearch.com is owned and published by Wyatt Investment Research. Wyatt Investment Research is neither a registered investment adviser nor a broker/dealer. Readers are advised that this electronic publication is issued solely for information purposes and should not to be construed as an offer to sell or the solicitation of an offer to buy any security.

We encourage you to review our full Email and Disclosure policies.
To view our Email Policy, please
click here. To view our Disclosure Policy, please click here.

If you believe this communication to be a mistake or unsolicited, please e-mail
abuse@bfpnewsletters.com with details regarding your situation, and we will be sure to promptly investigate your situation.

You are subscribed with the following email address: godsentnnodim.investment@blogger.com
To unsubscribe from this newsletter, please visit www.wyattresearch.com/unsub/godsentnnodim.investment@blogger.com

Copyright (c) 2013 Wyatt Investment Research. |
Privacy Policy

Wyatt Investment Research
65 Railroad Street
Richmond, VT 05477. PO Box 790


 

 

No comments:

Post a Comment