From my findings, I learnt that it is not easy to find Small Caps which have paid out consistent dividends to its shareholders over the long-term. This is because Small Caps, for most:
- Do not have a solid balance sheet with healthy cash balances.
- Keep cash to fund working capital or to expand, if they have cash.
Hence, if you found yourself a handful of Small Caps that have a track record of consistent dividend payouts, they would stand out in the market for Small Caps as they are rare jewels.
Here, I’ll share 3 of such Rare Jewels in this article. They are as follows:
Stock #1: Elk-Desa Resources Bhd (Bursa: 5228)
Elk-Desa Resources Bhd (Elk-Desa) offers hire purchase financing to purchasers of second-hand vehicles in Malaysia since 2004. In addition, Elk-Desa has began to trade furniture in mid-2015.
Over the past 4 years, Elk-Desa has achieved a CAGR of 12% in its hire purchase loan portfolio. Its net hire purchase receivables had increased steadily from RM 252.7 million in 2014 to RM 400.4 million in 2018. Its non-performing loan ratio remained low at 1.0% in 2018.
It had contributed to Elk-Desa’s increase in both sales and profits. Revenue had grown from RM 48.4 million in 2014 to RM 104.1 million in 2018. Meanwhile, it has increased its shareholders’ earnings from RM 16.4 million in 2014 to a total of RM 25.9 million in 2018. It has maintained its dividends per share (DPS) after a rights issue in 2016 at 6.75 sen per annum for the past 3 years.
As I write, Elk-Desa is trading at RM 1.30 a share. Hence, its current P/E Ratio is 13.1 based on its EPS 2018 of 9.91 sen. Its current P/B Ratio is 0.94 based on its net assets a share of RM 1.39 in 2018. Its dividend yield is 5.19% a year which is based on its latest DPS of 6.75 sen in 2018.
Summarized Financial Results:
| Year | Revenue
(RM ‘000) |
Shareholders’ Earnings
(RM ‘000) |
Dividends per Share
(Sen) |
|
2014 |
48,391 |
16,400 |
7.50 |
|
2015 |
57,615 |
18,796 |
7.50 |
|
2016 |
64,167 |
18,788 |
6.75* (RI) |
| 2017 |
94,489 |
23,001 |
6.75 |
| 2018 | 104,127 | 25,924 |
6.75 |
Source: Annual Reports of Elk-Desa Resources Bhd
Stock #2: Wellcall Holdings Bhd (Bursa: 7231)
Wellcall Holdings Bhd (Wellcall) manufactures a wide range of industrial rubber hoses and exports them to 200+ clients over 70+ countries worldwide. Its main markets are the United States, Canada, Europe, Australia and New Zealand.
For the last 5 years, Wellcall has increased its revenue from RM 146.4 million in 2014 to RM 171.1 million in 2018. This is due to higher export sales to its major markets as stated above. Since 2015, Wellcall had maintained its shareholders’ earnings at RM 30 – 40 million per annum and thus, had sustained its dividends per share (DPS) at 5 – 6 sen per annum.
As I write, Wellcall is trading at RM 1.25 a share. Hence, its current P/E Ratio is 19.65 based on its EPS 2018 of 6.36 sen. Its current P/B Ratio is 5.79 calculated based on its net assets a share of 21.6 sen in 2018. Its dividend yield is 4.36% a year based on its latest DPS of 5.45 sen in 2018.
Summarized Financial Results:
| Year | Revenue
(RM ‘000) |
Shareholders’ Earnings
(RM ‘000) |
Dividends per Share
(Sen) |
|
2014 |
146,363 |
29,466 |
5.13 |
|
2015 |
158,112 |
41,325 |
6.13 |
|
2016 |
134,470 |
31,291 |
6.13 |
|
2017 |
159,133 |
36,454 |
6.17 |
| 2018 | 171,124 | 31,649 |
5.45 |
Source: Annual Reports of Wellcall Holdings Bhd
Stock #3: Cocoaland Holdings Bhd (Bursa: 7205)
Cocoaland Holdings Bhd (Cocoaland) is a manufacturer of a wide range of food & beverage (F&B) products mainly hard candies, gummies, wafer and snacks in Malaysia under well-known brands such as Lot 100 and Cocopie. Here is a little known fact about Cocoaland.
Frasers & Neave Holdings Ltd (F&N) is presently the second largest shareholder of Cocoaland with 27.2% shareholdings. Hence, F&N Ltd and Thai Beverage are indirect shareholdings of Cocoaland.
For the last 5 years, Cocoaland has increased its sales from RM 254.5 million in 2013 to RM 267.2 million in 2017. It contributed to the growth in shareholders’ earnings from RM 22.1 million in 2013 to RM 33.5 million in 2017. It has grown its dividends per share (DPS) from 6.50 sen in 2013 to 13.00 sen in 2017.
As I write, Cocoaland is trading at RM 2.00 a share. Thus, its current P/E Ratio is 14.60 based on its EPS for the latest 12-month of 13.7 sen. Its current P/B Ratio is 1.90 based on net assets a share of RM 1.05 as at 30 September 2018. At RM 2.00 a share, its dividend yield is 6.50% per annum if it is able to keep its DPS at 13.0 sen a share.
Summarized Financial Results:
|
Year |
Revenue
(RM ‘000) |
Shareholders’ Earnings
(RM ‘000) |
Dividends per Share
(Sen) |
|
2013 |
254,450 |
22,050 |
6.50 |
|
2014 |
260,760 |
21,918 |
7.50 |
|
2015 |
261,645 |
32,721 |
8.00 |
|
2016 |
272,637 |
43,800 |
10.00 |
| 2017 | 267,153 | 33,526 |
13.00 |
Source: Annual Reports of Cocoaland Holdings Bhd
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