Main Street Capital: Invest along with management
The CEO and president are the two largest shareholders in this high-yielding investment firm.
It's rare to find a stock with a high yield, growing dividend, a very solid management team and bright prospects for the future. But that favorable situation is exactly what Main Street Capital (MAIN) offers.
Based in Houston, Main Street makes equity investments and loans money to small- and mid-sized companies. Its dividend is paid monthly. It has never been cut since the company was founded in 1997. The stock currently yields 7%.
Even during the recent financial crisis, the dividend remained constant. And it has been raised since then.
Main Street is well diversified. Of the 74 companies in its portfolio, the largest sectors are commercial services and suppliers, which compose 12% of its holdings. Energy and media each make up 9% of Main Street’s portfolio. Typically, these businesses are cash flow positive with revenue between $10 million and $100 million.
Geographically, 43% of its companies are located in Texas, Oklahoma, Arkansas, Louisiana, New Mexico and Arizona. Another 29% of the companies are in the West, including California.
Main Street is well positioned to take advantage of new opportunities. It has plenty of cash and marketable securities. And earnings here are top-notch. Last quarter, earnings jumped 32% on a 90% increase in revenue. Operating margins are a whopping 80%. And management is earning a healthy 18% return on equity.
Management is also accumulating the stock. Main Street's management team and directors own more than 15% of the company. CEO Vince Foster alone owns 1.3 million shares, or 4.5% of the total shares outstanding.
The company's President Todd Reppert owns another 700,000 shares. These two executives are the largest shareholders in the company. Foster earns roughly $1.9 million in dividends per year on his holdings. That's nearly five times as much as his paycheck. Reppert sees about $886,000 in annual dividends, roughly four times his salary.
The management team's interests are clearly aligned with shareholders. If the business does well, and management is able to increase the dividend, that puts more money directly back into their pockets. That's the way it should be.
- Six-pack of prudent dividend values
- Tune in to Gabelli Multi-Media for income
- Call options boost income at Blackrock Global
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.