March 12

3 Dirt Cheap Companies With High Dividends

Everyone loves to shop for cheap stocks but wouldn’t it be fantastic that you buy dirt cheap stocks and yet still enjoy high dividends while waiting for your capital gains to come?

We happen to find 3 stocks with such characteristics; check them out below:

#1 Willas-Array Electronics Holdings Ltd (SGX: BDR)

Willas-Array with major markets in China, Hong Kong and Taiwan is principally engaged in the distribution of electronic components for use in various industries as well as the provision of engineering solutions.

It also has long standing relationships with 20 internationally reputable principle suppliers and carries a wide product mix over 10,000 product items and cater to over 3,000 customers.

The company has declared a final dividend of HK$0.42 on 30 May 2018 for the financial year of 2017. The dividend yield based on the price of SGD$0.595 equates to whopping 12%. The company has been distributing out dividends from 2015 to 2018 with an exception of 2016.

Year 2015 2016 2017 2018
Dividend Yield 6.43% 5.34% 12.05%

From a valuation stand point, the company is cheap valuing at P/E 5.04x and Price to Book Value of 0.44x.

That said, the high dividend might not be sustainable given the cashflow used in operating activities for the past 2 years (2017 & 2018) have been negative. Furthermore, the debt to equity ratio for the company is 2.11 and on the high side.

#2 Ossia International Ltd (SGX: 008)

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Ossia has started as a footwear manufacturer but has grown into a regional distributor and retailer of lifestyle products in the Asia Pacific region.

The company has exclusive distribution, license and franchise rights for the Fashion apparels e.g. Elle, Bags/accessories e.g. Tumi, Hedgren etc and Sports apparels e.g. Columbia. The company also has a 19.8% stake in Pertama Holdings Pte Ltd which owns the Harvey Norman retails stores in Singapore and Malaysia.

The company has declared dividend of 4 cents on 31 July and 6 cents on 5th December 2018. Based on the current share price of $0.10, the dividend yield is a high 10%. The company has not distributed any dividends from 2015 to 2017 as net income is negative during this period.

Year 2015 2016 2017 2018
Dividend Yield 10%

The company is cheap valuing at P/E ratio of 4.72x and having a Price to Book ratio of 0.64x.

The company has no track record distributing dividend consistently and 2019 results has not been good so far. However, with the closure of under performing brands and disposal of properties, there might be a chance for the company to dish out yet another fat dividend.

#3 Serial System Ltd (S69)

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Serial System is involved in the distribution of electronic and electrical components, and trading and distribution of fast-moving consumer goods, photographic and timepiece products.

The company has been consistently distributing cash dividends from 2015 to 2018 and the dividend yield ranges from 8.09% to 10.12% for the previous financial year.

Year 2015 2016 2017 2018
Dividend Yield 8.09% 4.76% 2.80% 10.12%

The company’s valuation is cheap with P/E ratio of 3.39x and a Price to Book ratio of 0.42x.

The cashflow from operating activities has been mixed for the past the few years. Moving forward, we are cautiously optimistic that the company will continue the dividend distributions but the dividend yield will vary depending on the company profit and free cashflow.


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Tags

cheap stock high dividend, cheap stocks, dividend stocks, dividends, electronic distributor


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