Thursday, February 24, 2011

Micro Cap Dividend Stocks AMSWA CLCT PRGN

When investors focus on small and micro cap stocks their goal is generally high returns from appreciation. The focus of this article is to present three micro cap dividend stocks that have the potential for high appreciation and income from dividends along the way. The three stocks listed in this article are AMSWA, CLCT and PRGN.
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American Software Inc (AMSWA)
Current price: 6.61
52 week range: 4.52 - 7.19
Market cap: 170.41
Dividend yield 5.5%

American Software Inc operates in three segments supply chain management, enterprise resource planning and IT consulting.Their customer base is manufacturers, wholesale distributors, the health care industry, retailers, financial institutions and public utilities to name a few categories of 1,430 customers. Supply chain management or Logility is the driving source of AMSWA's revenue accounting for over 50%

Next Ex-dividend date 5/11/11 in the amount of $0.09. As you can see from the chart the company has been paying $0.09 dividends since 2008 and if AMSWA has more revenue growth I could foresee a dividend increase.

Fair Value Estimate: $10.02  (Based on an average dividend growth rate of 6.41% and a required rate of return of 10%) If the dividend is not raised in 2011 the estimate declines to $8.00 due to a decreased growth rate although the fair value estimate is significantly higher than the current price AMSWA must raise its dividend to help its stock price reach that level.

Collectors Universe Inc (CLCT)
Current price: 13.83
52 week range: 9.37 - 17.03
Market cap: 109.20M
Dividend yield 9.4%

CLCT provides authentication and grading services to collectors of coins, trading cards, sports memorabilia and other popular collectors items. They also have an online marketplace for collectors and dealers to buy and sell items in auction formats.

CLCT Just paid its dividend with an Ex-Date of 2/10/11 so it will probably be another three months to the next dividend. But right now the yield is 9.4% based upon the dividend amount of 0.325. I believe this dividend is sustainable if the company continues to have earnings like it did in 2010 with EPS of 2.24. That would put the dividend payout ratio at 58%.
 Fair Value Estimate $18.54 (With a growth rate of 3.42%, and a required return of 10%.) I believe this estimate is conservative and probably not as high as some of the current owners would put it but remember the 9% dividend yield and don't anticipate as much return from appreciation.

Paragon Shipping Inc (PRGN)
Current price: 3.07
52 week range: 3.04 - 5.05
Market cap: 161.91M
Dividend yield: 6.51

PRGN is based in Greece and incorporated in the Marshall Islands. The operate medium dry-bulk ships and rent these ships to multi-year agreements. The company currently owns 18 Dry bulk ships and 2 container carriers. Paragon Shipping recently announced their earnings release date of March 1, 2011 for fourth quarter and year end 2010 results.

It has been nearly a quarter since PRGN paid a dividend and I am looking forward to their earnings release on March 1 for dividend info but it should be coming directly. One thing I like about this stock is it's near its 52 week low which allows you to buy it at a price that will increase your dividend yield if they continue to pay their $0.05 dividend

Fair Value Estimate $3.46 (With a 4% growth rate and required return of 10%.) The growth rate I used was pretty much taken out of thin air due to the lack of any consistency with this company. But any growth rate less than 4% would put this stock right at fair value.

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