Information Services Corp (TSX:ISV) has possibly the most generic name of any company on the Toronto Stock Exchange.
It would be easy for investors to avoid it for that reason alone.
The company’s main asset is the Saskatchewan land titles registry. It is solely responsible for registering all new owners, mortgages, and the like on real estate title deeds for the whole province. Its exclusive contract with the province’s government runs through 2033.
There are very few true monopolies available to invest in these days. Information Services offers one.
The company also operates Saskatchewan’s corporate and personal property registries. It has also begun expanding into other related areas. In early 2017, it acquired Enterprise Registry Solutions, which is a leader in the development of registry technology solutions.
The company offers a few interesting perks for investors. One of the best is its profitability. In 2016, it generated $88.4 million in revenue. Net profits were $15.5 million, for margins of 17.5%. Those are fantastic margins that have traditionally been even higher; in 2015 net margins were closer to 20%.
The company earned $0.87 per share in 2016, down slightly from 2015’s earnings of $0.90 per share. The slowdown was because of an overall tepid economy in Saskatchewan. Still, even though the year was a little weak, the company still earned enough to cover its $0.80 dividend.
Free cash flow for 2016 was approximately $20 million, while dividends totaled $14 million. That gives the company a payout ratio of 70%, which is sustainable.
Shares currently yield 4% and have maintained their payout since 2014.
