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You’ve probably never heard of Information Services Corp. (TSX: ISV). Unless you live in Saskatchewan, that’s no surprise. It’s a small company based in Regina. It provides exclusive registry and information services to the Province of Saskatchewan. These include the Land Titles Registry, Land Surveys Directory, Personal Property Registry, and Corporate Registry.
Dull, dry stuff. You’d expect an operation like this to be part of a government bureaucracy, but it’s not. It’s actually a public company that trades on the Toronto Stock ExchangE.
No one shows much interest in it. The market cap is only $504 million, and the average daily trading volume is about 8,000 shares. If it were any smaller it would be invisible.
The company first came to my attention in November 2013. The shares were trading at $17.45, and it had just been announced the quarterly dividend was being increased to $0.20 ($0.80 a year). That translated into a yield of 4.58%, an attractive return for income-oriented investors from what appeared to be a stable business. I recommended the stock in my Income Investor newsletter.
It turned out pretty much as expected. The dividend has remained at the same level since, while the stock price showed little movement, generally trading in the $16-$19 range.
Then came the pandemic, which hit the Saskatchewan economy hard. The shares took a deep dive, falling to the $14 level at one point as demand for the company’s services dried up. However, the dividend remained intact.
This year, it’s a different story. Business has recovered, and the stock hit an all-time high of $33.87 recently before pulling back.
Third-quarter financials were just released this week, and continued to show a strong rebound after a weak 2020. Some highlights:
These are significant across-the-board improvements, and the jump in the share price reflects that. The stock closed on Nov. 12 at $27.20. The downside is that with the dividend unchanged at $0.20 per quarter, the yield is down to 2.9%.
Readers who bought in 2013 have a capital gain of 56% based on the original recommendation. Right now, I would sell and reinvest the money in a security with a higher yield. But remember that if the stock is in a non-registered account, capital gains tax will apply.
For those who have never owned the stock and are interested in a stable, dividend-paying security, put this on your watch list. If the price slips back to the point where the yield is 4% or better, speak to your advisor to see if it would work in your portfolio.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on Twitter at https://twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
Notes and Disclaimer
© 2021 by The Fund Library. All rights reserved. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
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