ISA Holdings: Here’s an idea, buy a share for its fat divvies
ISA argues the generous dividends are justified in light of ‘unnecessarily high levels of cash in the business’
With investors still transfixed by moving and shaking for the sake of diversity and critical mass, it is refreshing to see that the enduring singular operational focus at small information technology group ISA Holdings continues to pay off.
For more than two decades ISA has churned solid and dependable profits from its security offerings without – even in lean periods – looking for growth via acquisitions.
There’s no doubt ISA – like other singularly focused and cash-flush counters such as Combined Motor Holdings, Nu-World and Spur Corporation – will increasingly be viewed as an attractive dividend play.
For the year to end February, ISA proposed a final dividend of 19c a share plus a special distribution of 20c a share. ISA argued the special dividend was justified in light of “unnecessarily high levels of cash in the business (R63m or 40c a share at the end of the financial year) which was compounded by further cash inflows resulting from the settlement of the loan by our business partner subsequent to the current reporting period”.
Generous payouts would appear to be on the cards for the foreseeable future – not only because ISA has a stout balance sheet. Considering the chances of pursuing acquisitions are slim, ISA could be a worthwhile yield sweetener in the years to come – especially if its project business picks up.
Even though ISA is trading close to an all-time high, the share offers value on a high single-digit earnings multiple and a handsome 11% yield.