Recently I looked into the diversified, acquisition-oriented corporation which focuses in aviation services and equipment, and manufacturing, Exchange Income Corp. I dubbed Exchange Income a monthly dividend superstar. I announced that I was interested in buying shares if their Q1 results came out favourably, and boy did they deliver on all cylinders.
Exchange Income Corp. announced record results. One factor that management was extremely proud of was bringing the dividend payout ratio down to earth. Last year the payout ratio stood at 109%, and throughout Q1, they brought this down to a mere 79%. Much like Alaris Royalty Corp., EIF has been active in significantly reducing their payout ratio while diversifying their revenue streams through acquisitions in the past few years. EIF’s trailing twelve month payout ratio is even smaller, at 59%. Due to these improving factors, EIF was proud to declare a 5% increase to their monthly dividend, now $2.01 per share annualized. In the past 18 months, EIF has increased their dividend by 20%.
As we can see in their financial and operating highlights, EIF has reported really great double-digit increases in just about every financial metric. I’m very happy to see free cash flow is up 46%, and free cash flow less maintenance capex up 84%, up $0.21 per share from before. Considering this is what they calculate their payout ratio from, it’s fantastic news – and proves that if they continue down this path there will be a lot of dividend raises coming in the future.
While these are the highlights, in the press release, EIF describes exactly what segments of their corporation have been growing the most and they even believe that the aerospace segment can continue to grow at this pace given their investments in the sector.
These results are just absolutely outstanding… EIF has increased their net earnings by 957%, and adjusted earnings by 229%. Triple digits! Given these results I can see the stock definitely surpassing it’s all-time high today of $30.53, and given that – I suppose I’ll be purchasing shares at the top of the market. While so many investors prefer to be investing at the 52-week low, I think that for this corporation it does not matter. This is a quality, small-cap, monthly paying dividend stock which is consistently increasing their earnings and free cash flow, and as a result, their dividend. This is a definitive buy and hold stock, as far as I’m concerned; given these record Q1 results.
Anyone else buying into Exchange Income Corp. soon? Anyone else a share holder? How happy have you been to hold through the past 52 weeks, as your investment increased by 38%?