5 Reasons This May Be the Best Dividend Growth Stock You ve Never Heard of
Post on: 16 Март, 2015 No Comment
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It’s no secret that dividend growth stocks have proven to be the best kind of stock to own over the long-term. Numerous studies also prove that high-quality small cap stocks outperform larger companies. Finally, undervalued companies have long been the hall mark of some of history’s greatest investors, such as Benjamin Graham, David Dodd, and Warren Buffett.
What if I told you there was an unknown company that qualified as all three of these? An undervalued, almost unknown small-cap industrial company with a stellar dividend track record, strong growth prospects, high insider ownership, and a rock-solid balance sheet? This is a company that has, over the past 21 years, not only crushed its larger peers, but delivered annual total returns more than double that of the market.
Yet Chase Corp ( NYSEMKT: CCF ). virtually unknown with no analysts following it, is likely to continue its decades-long shareholder wealth creation winning streak thanks to five simple reasons. Find out why this industrial hidden gem deserves to be on your radar, and possibly in your portfolio.
Chase Corp: What it does
Chase Corp is a $316 million, 68-year-old diversified industrial manufacturer that primarily focuses on two segments: industrial and construction materials.
Its industrial segment consists of several brands, including:
- Chase & Sons: electrical and telecommunication cable tapes, sealants, and insulators.
- Chase BlH20Ock: sealant that protects power distribution cables from water damage.
- Humiseal: a conformable coating that protects circuit boards from chemical or water contamination in the automotive, defense, and aerospace industries.
The largest growth possibilities, however, are in Chase’s construction segment:
- Anti corrosive pipeline tapes serving the oil, gas, water, and waste water industries.
- Casing fillers used do seal and stabilize oil wells.
- Construction material protection coatings, such as for wires, timbers, and welds.
- Specialized foam to insulate, strengthen and suppress noise on bridges and highways.
- Rosphalt asphalt additive, which speeds up drying time and helps increases durability by 250%.
Chase’s construction segment is important because of two major economic trends likely to serve as strong growth catalysts for decades to come.
Major economic trends fueling future growth
According to analyst firm IHS, within the next 11 years, $890 billion will be invested into the U.S. oil and gas industry.
That will mean immense growth in demand for Chase’s casing fillers and pipeline sealing and protective tapes. For example, according to a study by ICF International, by 2035, $640 billion in additional midstream infrastructure—which includes pipelines, processing, and storage facilities—will be needed to service America’s historical energy boom.
As this infrastructure is built, ages, and breaks down, Chase’s pipeline sealers and tapes will likely see strong demand growth.
Coming infrastructure boom is badly needed
Another major growth catalyst for Chase is America’s large and largely failing bridge, highway, energy, and waste water infrastructure. The American Society of Civil Engineers graded America’s infrastructure a D+ in 2013 and stated that $3.6 trillion of investment would be needed by 2020 to improve it.
Specifically, the latest report from the ASCE cited the following concerns.