Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Before asking my question, I would like to thank you for the valuable opinions and analyses of the macroenvironment and stock selection. They brought me quite a lot of successs. Now a question on COG. I noticed the stock has drifted down continuously and has almost reached the support level. With a dividend yield of >8% fully franked, do you thnk it is now an opportunity to buy or it could be a dividend trap?
Thanks Gregory,
COG Financial Services (COG) is a $207mn investment holding company, it’s a new one to the MM Report and for subscribers that aren’t familiar with the business it essentially provides equipment finance for SME’s.
Its share price has been mixed since mid-2022, inline with its earnings. While they’ve grown the top line, they are having trouble translating this into profit growth, which has stayed very flat for the past 2-years, and forecasts imply that earnings will remain flat for the next couple, as shown on the Market Matters Forecasts Tab (here).
Inline with flat earnings, the dividend is also likely to remain flat, albeit at an attractive 8% level. On 23x and no growth, it’s not one for us.
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