Enjoy a 6% yield as Wajax strengthens its mining footprint

Wajax Corp. - an industrial equipment leader offers compelling value through its diversified customer base and recent strategic expansion into hydraulic services.

Management’s recent 6.1% dividend hike helped push the yield to its current attractive level, demonstrating confidence in the firm’s prospects despite a temporary revenue dip from a cycled-off mining contract.

Even with a defensive business model combining equipment sales and maintenance services, plus strong growth prospects in infrastructure and resources, the stock still trades at just 8.7 times the company’s forward earnings forecast.

WAJAX CORP. (Toronto symbol WJX; www.wajax.ca) sells and services cranes, forklifts and other heavy equipment. Wajax also provides related parts and systems such as ball bearings, hoses, diesel engines and transmissions. The company’s customers are spread across the resources, construction, manufacturing and transportation industries.

Last year, Wajax acquired Sault Ste. Marie, Ontario-based Beta Fluid Power Ltd. and Beta Industrial Ltd. The purchase price has not yet been disclosed.

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Beta Fluid is a leading regional supplier of hydraulic and pneumatic equipment for use in the industrial, mining and construction sectors. It also offers hydraulic and pneumatic maintenance, repair and replacement services, including mobile services. Beta Industrial provides a wide range of on-site facility repair and maintenance services.

Dividend Stocks: High payout is secure despite a revenue dip at Wajax

In the quarter ended September 30, 2024, overall revenue fell 5.6%, to $481.0 million from $509.7 million a year earlier. Equipment sales declined in part as a result of the delivery of a large mining shovel in the third quarter of 2023, which did not recur this year. Excluding one-time items, Wajax earned $9.6 million, or $0.44. That was down 53.6% from $20.7 million, or $0.96.

The company raised its quarterly dividend by 6.1% with the April 2024 payment, to $0.35 a share from $0.33. The stock now yields a high 6.0%.

Recommendation in Power Growth Investor: Wajax Corp. is a buy.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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