A portfolio of stocks I'm building, named Ivy, holds 52 dividend dogs. Ivy is the fourth portfolio I've built (at a one dividend dog per week pace) since 2014. Four portfolios = IV!
Today I'm reviewing the first of five industrials sector stocks this week striving to become the seventh of eight from that sector to join the Ivy folio.
That industrials sector includes twenty-three industries all related to designing, fabricating and servicing stuff we want and use. The industrials industries range from aerospace and defense to waste management with all the transportation, business services, and equipment required in between.
Today I'm reviewing a small-cap rental and leasing services company named McGrath RentCorp. Their trading ticker symbol is MGRC.
McGrath RentCorp is a rental company. It is comprised of four reportable business segments: modular building and portable storage segment (Mobile Modular), electronic test equipment segment (TRS-RenTelco), containment solutions for the storage of hazardous and non-hazardous liquids and solids segment (Adler Tanks) and classroom manufacturing division selling modular classrooms in California (Enviroplex).
The company generates its revenues primarily from the rental of its equipment on operating leases with sales of equipment occurring in the normal course of business.
McGrath RentCorp was founded in 1979 and is headquartered in Livermore, California.
I use three key data points to gauge dividend-paying equities or funds like McGrath RentCorp (MGRC):
(1) Price
(2) Dividends
(3) Returns
Besides those three, several other keys will finally unlock an equity or fund in which to invest.
Those three basic keys, however, best tell whether a company has made, is making, and will make money.
MGRC Price
McGrath's price per share closed at $67.96 Friday. A year ago its price was $57.28. Price rose $10.68 or 18.6% in the past year.
Assuming McGrath's stock trades in the range of $55.00 to $85.00 this year, McGrath's recent $67.96 price could rise by $7.04 and go to $75.00 by August 2020.
MGRC Dividends
McGrath's most recent quarterly dividend was $0.375 paid July 31st
That $0.375 Q payout equates to an annual dividend of $1.50 generating a yield of 2.21% based on Friday's $67.96 closing price.
Gains For MGRC?
Adding the $1.50 annual estimated dividend to my $7.04 estimate of McGrath's price upside shows an $8.54 potential gross annual gain, per share, which will be reduced by costs to trade those shares.
Say we pay a little over $1,000.00 today at the $67.96 recent stock price, we'd buy 15 McGrath RentCorp (MGRC) shares.
A $10 broker fee paid half at purchase and half at the sale will cost us $0.67 per share.
Subtract that $0.67 brokerage cost from the estimated $8.54 gross annual gain leaves a net gain of $7.87 X 15 shares = $118.05 or an 11.75% net gain on a $1,019.40 investment.
Therefore, McGrath RentCorp whose trading ticker symbol is MGRC now shows a possible net gain of 11.75% including a 2.21% dividend yield.
Three brokers track McGrath RentCorp (MGRC) stock:
Two say "buy" MGRC
One says "hold" MGRC.
Their consensus score of 1.67 equates to "Outperform."
Now we can look at McGrath RentCorp (MGRC) and see it has made money, is making money, and could net an 11.75% gain including a 2.21% dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to learn if McGrath RentCorp (MGRC) is worth your time and money.
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