A Yield to Caution

Article Excerpt

DELUXE CORP. $35 (New York symbol DLX; Shares outstanding: 42.5 million; Market cap: $1.5 billion; Divd. yield: 3.4%; www.deluxe.com) is a product and services provider for small businesses and financial institutions. Its products include cheques and other cheque-related products as well as printed forms such as invoices and deposit tickets. Deluxe pays a quarterly dividend of $0.30 a share for an attractive 3.4% yield. However, that yield may only be sustainable if the company completes its transformation. With cheque usage contracting, Deluxe has targeted the electronics payment market for growth. To accelerate its move into that space, Deluxe paid $960 million in June 2021 to acquire First American Payment Systems. First American provides customers with in-store, online, and mobile payments. The First American purchase is intended to transform Deluxe from a cheque printer into a leading financial technology company. But while the company’s transition from cheque printing to electronic payments is now underway, it’s uncertain whether that will ultimately pay off for investors. Meanwhile, growth by…