Monthly Dividend Stock In Focus: U.S. Global Investors

Exchange-traded fund and mutual fund providers have consolidated in a big way in recent years. The number of these independent companies has dwindled via mergers, and the ones that are left are generally not thought of as income stocks.

U.S. Global Investors, Inc. (GROW) pays a dividend, but with a low yield of just 1.3% that is well below the S&P 500 average yield. On the plus side, the company pays its dividends monthly, instead of quarterly or semi-annually. This allows for more frequent payments for those investors that purchase stocks primarily for income.

U.S. Global Investors’ yield of just 1.3% is unattractive from an income perspective, even if it is paid monthly. In addition, we see future growth as challenging. And while the dividend is likely safe for now, deteriorating earnings could result in a payout cut or suspension in the future.

This article will analyze the investment prospects of U.S. Global Investors in greater detail.

Business Overview

U.S. Global Investors began more than 50 years ago as an investment club. Today, it is a publicly-traded registered investment advisor that looks to provide investing opportunities in niche markets around the world. The company provides sector-specific exchange-traded funds and mutual funds and recently moved into crypto-currencies. U.S. Global Investors produces less than $4 million in annual revenue and has a market capitalization of just $35 million.

Source: Investor presentation, page 48

The company has a number of niche products in its portfolio of offerings, with the breakdown at roughly two-thirds in emerging markets and natural resources, and the balance in US equity and fixed income products. In addition, U.S. Global Investors’ customer base is almost entirely retail investors, with institutional holdings at just one-sixth of total assets.

Retail investors tend to move money in and out of products more often than institutional investors, so we see this as hindering future growth, in addition to making results more volatile.

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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