This Under-$10 Dividend Stock Pays a 6.8% Yield

Decisive Dividend is a small-cap, high-dividend stock that offers shareholders a yield of almost 7% in May 2024.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in lower-priced stocks that offer a tasty and growing dividend yield can help you generate a steady stream of passive income at a low cost. One such under-$10 dividend stock that pays a 6.8% yield is Decisive Dividend (TSXV:DE). Valued at a market cap of $153 million, Decisive Dividend pays shareholders a monthly dividend of $0.045 per share, indicating a yield of almost 6.8%.

In the last 10 years, the small-cap stock has risen close to 700%. After adjusting for dividends, cumulative returns are much higher at 1,430%. However, the TSXV dividend stock trades 29% below all-time highs, allowing shareholders to buy the dip. Let’s see if this dividend stock should be a part of your portfolio in 2024.

Created with Highcharts 11.4.3Decisive Dividend + iShares S&p/tsx 60 Index ETF PriceZoom1M3M6MYTD1Y5Y10YALL12 May 201410 May 2024Zoom ▾20152016201720182019202020212022202320240www.fool.ca

An overview of Decisive Dividend

Decisive Dividend is an acquisition-oriented company focused on opportunities in the manufacturing sector. It uses a disciplined acquisition strategy to identify profitable, high-quality manufacturing companies with a sustainable competitive advantage, a focus on non-discretionary products, steady cash flows, and growth potential.

Decisive Dividend acquires Techbelt

Last month, Decisive Dividend acquired Techbelt, a manufacturer of PTFE (polytetrafluoroethylene) conveyor belts, PTFE tapes, and related materials used in a wide range of end markets such as food and beverage, packaging, textiles, and fast-moving consumer goods.

The acquisition was valued at $6.3 million and self-funded through a drawdown on the company’s syndicated credit facility.

The acquisition enhances the scale of Decisive Dividend’s wear-parts product segment while allowing it to expand in the United Kingdom. Moreover Decisive Dividend expects the acquisition to be immediately accretive and increase adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 3% year over year.

Decisive Dividend stated that Techbelt adds another recurring revenue, high-margin, low-capital intensity business to its portfolio.

How did Decisive Dividend perform in Q1 of 2024?

Due to a challenging macro environment, Decisive Dividend reported revenue of $29.4 million in the first quarter (Q1) of 2024, down 5% year over year. The decline in the top line was driven by decreases in hearth product sales, where backlogs were lower in Q1 compared to the year-ago period.

Its consolidated gross profit rose 1% to $11.2 million, indicating a margin of 38%, up from 36% in the prior-year quarter. One reason for the high gross margins was the contribution from four high-margin businesses acquired in 2023.  

However, an elevated cost environment meant adjusted EBITDA fell by 19% to $4 million in the March quarter. Its net income fell to $0.2 million, or $0.01 per share, compared to a net income of $2 million, or $0.13 per share, in the year-ago period. Its consolidated free cash flow also fell 36% to $1.9 million, or $0.10 per share.

Decisive Dividend explained that an erosion in profit margins has meant its payout ratio has risen to 66% in the last 12 months, up from 54% in 2023. However, it is still within target levels, providing the company with the flexibility to target accretive acquisitions and grow the payout over time.

Priced at 13.8 times forward earnings, the dividend stock is quite cheap, given that analysts expect adjusted earnings to expand from $0.45 per share in 2023 to $0.58 per share in 2024 and $0.75 per share in 2025.

Analysts remain bullish and expect the stock to surge over 40% in the next 12 months.

Should you invest $1,000 in Sierra Metals Inc. right now?

Before you buy stock in Sierra Metals Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Sierra Metals Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Decisive Dividend. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

ETF chart stocks
Dividend Stocks

Investing $7,000 in Your TFSA? Consider These 2 Canadian ETFs for Retirement

Turn $7,000 into tax-free wealth! 2 top ETFs for 4%+ dividends and retirement growth to max your TFSA this May!

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Smartest Canadian Stock to Buy With $5,000 Right Now

This smartest Canadian stock can convert your $5,000 investment to about $30,595 in 10 years, more than six times your…

Read more »

happy woman throws cash
Dividend Stocks

How I’d Turn $14,000 in My TFSA into a Money-Making Machine

Investing over time in a diversified Canadian dividend ETF like the VDY is one way to make a money-making machine…

Read more »

stocks climbing green bull market
Dividend Stocks

The Smartest Canadian Stock to Buy With $3,000 Right Now

Alimentation Couche-Tard Inc (TSX:ATD) is a good TSX stock.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How I’d Invest $50,000 of TFSA Cash as Canada-US Trade Uncertainty Expands

We're all uncertain about how this trade war will shake out, so here are some top stocks to keep your…

Read more »

data analyze research
Dividend Stocks

An Ideal 8.3% Dividend Stock Paying Cash Every Month as Trade Tensions Heighten

Trade tensions continue to trouble investors, but this dividend stock could certainly help smooth things over.

Read more »

exchange traded funds
Dividend Stocks

I’d Invest $15,000 in These High-Yielding Dividend ETFs for Passive Income

iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) has a very high yield.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Consistent Monthly Income

If you want some consistent dividend passive income in your TFSA, these are the top choices I'd go with.

Read more »