In the scramble for income, investors typically gravitate to the larger companies on the ASX. However, micro-cap company Ashley Services Group Limited (ASX: ASH) just declared a very juicy final dividend and is certainly one to watch.
Ashley Services are an integrated labour hire, recruitment and training organisation that have been in business since 1968. The company listed on the ASX in 2014 and now employ more than 250 internal staff with operations right across Australia. The Labour Hire division of the business typically employs close to 5,000 on-hired employees each week.
Dividend Announcement
The company released an announcement this afternoon declaring a final fully franked dividend of 2.7 cents per share payable to eligible shareholders.
Despite Ashley Services choosing to pay dividends just the once during the year (most profitable companies typically pay 2 dividends per year), this dividend translates to a very strong dividend yield of 8.2%.
The dividend is supported by a very strong balance sheet, with Ashley Services carrying no debt. However, like most small cap ASX shares, the financial performance of the company can be volatile so I would be cautious of putting too much faith in the sustainability of such dividends.
Ashley Services is yet to release its full-year results but these are due to be reported later this month once the final audit is complete.
Is There Further Growth To Come?
Management have done a terrific job the past couple of years to improve the operating performance of the company. And, with no debt on the balance sheet, management have the option to pursue attractive growth initiatives as and when they arise. However, the company operates within a very competitive environment and any further deterioration in the economy could be a severe impediment to growth.
Ashley Services is on my watchlist and I will continue to monitor its progress from the sidelines.
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At the time of publishing, Luke has no financial interest in any companies mentioned.
