Initiating a dividend shows a company’s ability to generate consistent cash flows
SmallCapPower | August 25, 2016: Issuing a dividend for the first time is a big milestone in a company’s lifecycle. Usually it implies the business has grown to such a level where consistent cash flow generation has become a true trait of the stock. Dividends are not only a good way to give back to investors, but also fundamentally categorizes it into an “income stock,” opening doors for Income fund managers to add these stocks to their institutional positions. On our list today are a couple of companies that have recently began paying dividends for the first time.
Brick Brewing Co. Ltd. (TSE:BRB) – $2.60
Brewers
Brick Brewing is Ontario’s largest Canadian-owned brewery. Founded in 1984, Brick Brewing Co. was the first craft brewery to start up in Ontario. The Company is officially certified under the Global Food Safety Standard, one of the highest and most internationally recognized standards for safe food production.
Brick has complemented its Waterloo premium craft beers with the popular Laker brand. In 2011, Brick purchased the Canadian rights to Seagram Coolers and in 2015, secured the exclusive Canadian rights to both LandShark and Margaritaville. In addition, Brick utilizes its leading edge brewing, blending and packaging capabilities to provide an extensive array of contract manufacturing services in beer, coolers and ciders.
The Company has grown its revenues to over $37 million for the fiscal year ended January 31, 2016, and paid its first dividend on January 15th, 2016. This newly-issued dividend represents an annualized dividend yield of 2%, not bad for a $90 million market cap company.
Sandvine Corp. (TSE:SVC) – $3.55
Communications and Networking
Sandvine develops and markets Network Policy Control solutions for communications service providers. The Company’s solutions help service providers better understand their networks and apply specific network policies that will improve the quality of service for their subscribers, support the creation of new revenue-generating services, mitigate malicious traffic, more efficiently manage network traffic and notify subscribers of important information.
The Company has grown its customer list to over 300, including some top tier names such as Virgin Mobile, Telefonica, Comcast and others. This $500 million market cap stock generated C$171 million in revenues over the last 12 months, and issued its first dividend on February 8th, 2016, which was Q1 of 2016. Better yet, the Company raised its dividend the following quarter (most recent – Q2/2016). The dividend yield on the stock is about 2.4% – also not bad for a company with much more growth ahead.
