BROADRIDGE FINANCIAL SOLUTIONS $55.43 - New York symbol BR

BROADRIDGE FINANCIAL SOLUTIONS $55.43 New York symbol BR; TSINetwork Rating: Average) (201-714-3000; www.broadridge.com; Shares outstanding: 118.6 million; Market cap: $6.6 billion; Dividend yield: 2.2%) serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada. Without one-time items, Broadridge earned $46.5 million in its fiscal 2016 first quarter, which ended December 31, 2015. That’s up 16.5% from $39.9 million a year earlier. Earnings per share rose 18.8%, to $0.38 from $0.32, on fewer shares outstanding. Recurring revenue cuts risk Revenue gained 11.1%, to $638.9 million from $574.6 million. While the company continues to attract new clients, it is holding on to existing ones. Recurring fee revenue rose 8.0% in the latest quarter and accounted for 62% of the total. Broadridge typically makes about half of its profits in its fourth quarter, which ends June 30. That’s the busiest period for processing proxies and annual reports. The company expects its earnings per share to rise 8% to 12% in fiscal 2016, and the stock trades at 20.4 times the midpoint of that forecast ($2.72 a share). That’s still reasonable in light of its high market share and strong growth prospects. Broadridge raised its quarterly dividend payment by 11.1% with the October 2015 payment, to $0.30 a share from $0.27. The new annual rate of $1.20 yields 2.2%. Broadridge is a buy.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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