Analyzing Small Cap Stocks: Decisive Dividend
The TDR Three Key Takeaways regarding Decisive Dividend and Small Cap Stocks:
- In the last 12 months, Decisive Dividend generated $113 million in revenue, with a notable revenue growth rate of 20.4%.
- Decisive Dividend offers a compelling dividend yield of 7.7%, rewarding investors with consistent returns.
- Decisive Dividend maintains a conservative debt structure, with $0.62 of debt for every dollar of assets.
Decisive Dividend Corporation (TSXV: DE), headquartered in Kelowna, BC, Canada, operates in the diversified manufacturing sector with a market cap of $99 million USD. With a current share price of $7.02, this small-cap stock offers an intriguing investment opportunity, underscored by strong financial performance and a strategic business model.
Decisive Dividend’s approach mirrors the successful strategy of Exchange Income Corporation (EIC), which scaled to $2 billion in twenty years of market value. The company’s model focuses on acquiring businesses from owners who prioritize the welfare of their employees and the preservation of their legacy over the highest sale price. This commitment to maintaining business integrity has allowed Decisive Dividend to build a diverse portfolio of 14 manufacturing companies, ensuring stable and consistent revenue streams.
Decisive Dividend has demonstrated remarkable financial stability and growth. In the last 12 months, the company generated $113 million in revenue, with a notable revenue growth rate of 20.4%. Over three and five years, the revenue growth rates were 40.7% and 28.8%, respectively, illustrating the company’s solid expansion strategy.
The company’s gross margin reflects its efficiency in operations, while the EBITDA for the last year stood at $21 million. Despite significant depreciation affecting net income, the company produced $11.6 million in levered free cash flow, highlighting its strong cash generation capability. This cash flow is particularly impressive given the company’s $113 million market cap, positioning Decisive Dividend as an undervalued in the small-cap space.
Decisive Dividend’s portfolio includes a variety of manufacturing companies, such as Blaze King (wood and gas stoves), Hawk (precision machinery), Tech Belt (food and packaging), and Procord (industrial radiators). These companies, while not household names, consistently generate free cash flow, contributing to the overall financial health of the company.
The company’s balance sheet is strong, with a credit score of 6.6 and a current ratio of 1.9, indicating strong liquidity. Decisive Dividend maintains a conservative debt structure, with $0.62 of debt for every dollar of assets. This prudent financial management ensures that the company can sustainably grow through strategic acquisitions without overleveraging.
The company offers a compelling dividend yield of 7.7%, rewarding investors with consistent returns. Despite the challenges posed by the COVID-19 pandemic, the company has managed to achieve a three-year dividend growth rate of 10.1% and a five-year rate of 5.9%. This resilience underscores the company’s commitment to returning value to its shareholders.
As more business owners approach retirement, the pool of acquisition opportunities for Decisive Dividend is expected to grow. This demographic trend, combined with the company’s solid acquisition strategy, positions Decisive Dividend for continued expansion. The company’s strong financial health and attractive dividend yield provide a solid foundation for future growth. Want to be updated on Cannabis, AI, Small Cap, and Crypto? Subscribe to our Daily Baked in Newsletter!
