Jarvis Securities: big dividend payer in a booming market Primarily an online stockbroking operation, Jarvis Securities is a successful dividendpaying AIM company. Recent changes and forthcoming events make the profit outlook extremely favourable. Quoted on AIM since December 2004, Jarvis Securities is the parent company of Jarvis Investment Management (JIM). Headquartered in Tunbridge Wells, Kent, JIM provides outsourced investment administration services to financial firms and execution only stockbroking to the public. Jarvis offers share trading through its X-O (‘execution only’) website and Sharedeal Active, a telephone dealing business. Each is keenly priced. For businesses such as IFAs, Jarvis offers a clearing and settlement service ‘Model B’. The company also administers savings schemes for Investment Trusts.
Mr Grant and his family control 52% Jarvis is run by its Founder and majority shareholder Andrew Grant. Mr Grant and his family control 52% of the company’s shares. In a company with a market capitalisation of £58m, this will deter some fund managers, who may fear that it would www.aimprospector.co.uk
be impractical to trade a meaningful stake in the company. This should be much less of a worry to private investors. While Mr Grant controls enough of the company to prevent it being taken over, he does not have enough to force a delisting. Stay-away fund managers create an opportunity to buy Jarvis at a lower price. This discount increases the yield on the shares, making them an attractive income and growth play.
attractive income and growth play In the five years from 2008 to 2013, Jarvis increased revenues from £4.9m to £7.2m. Post-tax profits in that period rose from £1.3m to £2.4m. Dividends have risen from 5p per share for 2006 to 14.5p for the last full year. Jarvis has a stated dividend policy of paying two thirds of post-tax profits to shareholders in dividends. Given the nature of its business lines, it is difficult to imagine how Jarvis could ever return a loss. The company’s balance sheet is also reassuring. Jarvis’ current assets at the year-end exceeded total liabilities by £3m. Jarvis commented with its last results on how the IPO of Royal Mail led to ‘unprecedented demand for new accounts’. The eventual sale of
the government’s stakes in Lloyds and RBS mean that an even greater bonanza awaits. Given the private investor community’s predilection for trading AIM shares, the lifting of the ban on AIM shares in ISAs alone would be expected to have a significantly positive impact on the 2014 year.
significantly positive impact on the 2014 year According to the consensus forecasts available, Jarvis will post 5.1% EPS growth for 2014 and another 6.2% advance next year. The dividend is expected to continue rising in-line with earnings. Recent half-year numbers showed a 9.7% increase in EPS and a 23.1% dividend hike. Existing forecasts appear to be conservative. Jarvis Securities (LON:JIM) FOR Dividend-focussed firm Fantastic market opportunities AGAINST Thin margins in online business High valuation Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high
£59m 515p:535p 22.1 3.2% 331p:538p
Published on Aug 1, 2014