Q: Wondering about GCG.A for dividend growth with chance of some appreciation in an un-registered account? Seems to have had very strong div growth over 20 years which is quite impressive with a very responsible payout ratio and decent if not spectacular growth.
5i Research Answer:
The 39c dividend was 6.5c 10 years ago, so there has certainly been good growth here. The stock is up 82% in 10 years. It is a bit of a sleeper company, with only three analysts, market cap less than $1B, and a fairly tight share float. On a pure earnings basis it is not cheap, at 39X earnings, but investors are paying for growth and reliability. Still, it has lost money before, in 2022 and 2018. The Q1 of this year was not great. Payout ratio is 50%. We think it is 'fine' with the caveat that its small size adds some risk. We have no real qualms against it, other than valuation.