Late this afternoon, Armanino Foods of Distinction (symbol AMNF on the pink sheets) released its third quarter dividend announcement. The board declared the regular 1.2 cent per share dividend. In addition, the board also declared a special dividend of 1.2 cents. This is great news for holders of the stock.
With the special dividend, Armanino will pay 6 cents in dividends this year. The stock was selling for 88 cents per share when the announcement was made and it has since jumped up to 92 cents. Even at the higher price, the dividend yield is just over 6.5%. There are few options today to earn that kind of return on one's money, particularly if one is looking for safety. Even better, at least for 2012, the dividend is tax advantaged as a qualified dividend. In other words, the maximum tax on the dividend is 15% and could be less for those with lower incomes.
On top of the return, Armanino is strongly growing both its revenues and profits. We know from prior press releases that the company has already locked in its material costs for the rest of the year, so there is no danger of any downturn due to high costs of wheat or other raw foodstuffs. Further, the Armanino product line is not one that is likely to suffer much should the economy fall into recession. Looking backward, one sees that Armanino came through the 2008/2009 recession with only a slight slowing in growth. People do not stop eating Italian foods just because there is a recession.
Putting all this together, Armanino is a great buy. It is selling at a very low price/earnings multiple. I estimate the earnings for 2012 at between 8.5 and 9.0 cents per share. That means the stock is selling between 10 an 11 times projected earnings. It is a very low multiple for a company in the food business, and it is even lower considering the rapidity of the company's growth. In short, Armanino stock ought to continue to rise. Even better, while waiting for that rise to occur, you can get a yield of 6.5% on your investment.
DISCLOSURE: I am long Armanino and have been for many years.
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