The Facts (as of Sept 14, 2012)
Share price: $44.99. Book value per share: $13.69. Market cap: $753 million (medium). Distribution: $0.27 per month or $3.24 per year. Current yield: 7.2%. Debt/equity ratio:0.30. Payout ratio 77%. P/E: 10.88.
Wajax Corporation is engaged in the distribution, rental, modification and servicing of mobile equipment (Wajax Equipment); the distribution, servicing, custom design and assembly of industrial components, such as bearings, power transmission equipment, pumps and hydraulic systems, and process equipment for in-plant applications and original equipment manufactures (Wajax Industrial Components), and the distribution, rental and servicing of engines, transmissions and power generators for on-highway, off-highway and electrical power generation applications (Wajax Power Systems).
I recommended this to a client during the depths of the market crash, since which time the stock price has tripled. That performance is supported by improvement of the company’s operations. The company is profitable and pays a dividend which has been consistently increasing, supporting the stock price. The relatively low debt level adds some buffer against uncertainty. This company was recently added to the index.
During a period of economic weakness (such as 2008 – 2009), the dividend was cut, which could be repeated in future. The company doesn’t appear to be focused on growth, so much as generation of cash flow. The fortunes of this company are tied to the outlook for natural resources and construction.
I have watched this company for quite a while. Management is well regarded and the price recently pulled back from a new high. It seems like a good, steady company to own during a period of good economic activity, and one that pays a reasonable dividend. I would like to own a certain amount, with the understanding that the dividend isn’t guaranteed and could be reduced (which would have a knock on effect on the stock price).