Every once in a while, a company announces a seemingly trivial piece of news that makes investors take notice.

Such is the case with Decisive Dividend’s (CA:DE) July 14 announcement that it would increase its monthly dividend by 14% from $0.035 a share to $0.04. Payable on Aug. 15 for shareholders of record as of July 31, the annualized rate of $0.48 yields a high 6.3%.

While the dividend is a reason to consider DE stock, it’s not the only reason for aggressive investors to look closer.

Who Is Decisive Dividend?

It’s okay if you don’t know much about the company. Here at Fintel, we’re also in the early stages of doing our due diligence on Decisive.

According to the company’s June 27, 2013, prospectus, it sought to raise between $1 million and $1.5 million in its IPO as a Capital Pool Company (CPC), the Canadian equivalent of the SPAC (special purpose acquisition company). It completed its IPO on Sept. 19, 2013.

The principals of the CPC had 24 months from its IPO to make a Qualifying Transaction (QT). Decisive focused on manufacturing businesses.

The CPC completed its QT on Feb. 27, 2015, by acquiring Valley Comfort Systems Inc. for $6.6 million, which included $5.94 million in cash and the issuance of 330,000 shares of its stock. The cash portion of the purchase price was paid with a $3.5 million term loan and the remainder through a private placement.

Valley Comfort operated Blaze King, a manufacturer of wood-burning stoves. Their stoves have some of the highest efficiency ratings in the industry. The company’s products are manufactured in Penticton, B.C., and Walla Walla, Washington.

Decisive Dividend in 2023

Decisive’s strategy is to buy manufacturing businesses with enterprise values of up to $25 million, build them up, and then hold them indefinitely. Operatng under the philosophy “Our purpose is to be the sought-out choice for exiting legacy-minded business owners, while supporting the long-term success of the businesses acquired,” this is no private equity firm.

Since acquiring Blaze King, it’s added nine businesses to the Decisive portfolio. Its most recent acquisitions were in April 2023. The company acquired three manufacturing businesses supporting the road maintenance and construction industries. It paid $17.2 million combined for the lot of them.

To help pay for the acquisitions, it simultaneously did a bought deal for $8 million. Investors got an excellent value, paying $5.91 a unit consisting of one common share of DE stock and one-half common share purchase warrant. A full warrant entitled an investor to purchase a share anytime over the next 24 months for $7.09.

Assuming investors have exercised their warrants, an investor who bought one unit paid $6.50 a share for the two shares. Based on its current $7.55 share price, they’ve appreciated by 16% in three months.

Six-fold Revenue Jump

Excluding the most recent acquisitions, Decisive’s revenues increased by 641% between 2015 and the end of 2022. Its adjusted EBITDA has grown by 592% over the past seven years, a compound annual growth rate of 27%.

The company’s acquisition philosophy is simple: It buys 100% of manufacturers where it can add value to the business. It pays for the acquisitions with at least a 10% equity component and lets the companies continue operating autonomously.

In Q1 2023, Decisive’s businesses generated $30.85 million in revenue, 65% higher than in Q1 2022. Its operating profit was $2.56 million, 183% higher year-over-year. Its balance sheet is strong, with $32.1 million in long-term debt, just 24% of its market cap.

As the introduction mentions, Decisive Dividend has a healthy dividend yield of 6.3%. Since 2015, it’s paid out $21.1 million in dividends. Based on $2.29 in cumulative dividends since 2015, the shareholder who bought seven years ago has a cumulative 30.3% dividend yield.

Trading at 1.03x sales, Decisive Dividend should be on investors’ watchlists.

This article originally appeared on Fintel

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