#2 CDW Holding Limited
CDW is a Japanese-managed precision component manufacturer. It focuses on the production and supply of niche precision components for mobile communication equipment, gamebox entertainment equipment, consumer and information technology equipment, office equipment and electrical appliances. It has presence in Japan, Hong Kong, China, and Philippines.
As its latest quarterly report, CDW’s revenue increased by 9.7% to USD 49.5 million. Its net profit increased by an admirable 124.4% to USD 0.46 million. Free cash flow came in at a negative USD 3.9 million. Cash balance of the company was a healthy level of USD 18.7 million.
In FY 2019, CDW paid out a total dividend of USD 0.011 per share. This represents a dividend payout ratio of more than 100% as earnings from FY 2019 was negative.
Dividend paid out has been stable in the range of USD 0.011 – 0.012 per share for the past 3 years.
CDW’s revenue has been hovering at the USD 100 – 110 million levels for the past 5 years. This indicates that the company has reached a stable phase and looking for the next breakthrough to propel its revenue.
Barring any unforeseen circumstances, CDW’s dividend pay out is likely to be around the range for the past 3 years. With a dividend yield of 8.3% in today’s terms, CDW could be considered as a sound dividend play.
CDW last closed at $ 0.132 which gives it a
dividend yield of 8.3%. As the net profit was negative last year, P/E is not a meaningful ratio to be used.
#3 Overseas Education Limited
Overseas Education Limited (OEL) is the holding company of Overseas Family School Limited which operates Overseas Family School (OFS). OFS provides international education to children of expatriates’ families from aged 2 to 18 years old.
As its latest quarterly report, OEL’s revenue increased slightly by 0.5% to $ 41.4 million. Its net profit increased by 51.2% to $ 5.57 million. Free cash flow came in at a negative $ 7.55 million. Cash balance of the company came in at a healthy $30.8 million.
In FY 2019, OEL paid out a total dividend of $ 0.0275 per share. This represents a dividend payout ratio of 144% and
gives it a dividend yield of 9.5%.
Generally, OEL has a dividend policy of paying out not less than 50% of its profit after tax. Moreover, OEL has been paying out the same dividend for the past 7 years, which speaks for its sustainability.
A point to note is that OEL has set aside a reserve for its dividends, and it is currently standing at $67 million. The annual dividend pay out from OEL takes up about $11.8 million. Assuming there are no additions to the reserves, investors could still enjoy up to 5 years of dividends at an interest rate of 9.5%.
OEL last closed at $0.29, which values it at a P/E ratio of 15.01 and dividend yield of 9.5%.