One of the amazing things about investing is discovering new and exciting investments that hold a massive amount of long-term potential. Often, these investments are operating in plain sight, either providing valuable services to us that we take for granted or catering to some segment of the economy where competition is limited and profits are high.
One such investment that is worthy of consideration is Exchange Income Corporation (TSX:EIF), and here are a few reasons why prospective investors would be wise to take a look at what the company can offer.
Meet Exchange Income Corp.
Winnipeg-based Exchange Income Corp. caters to both the aviation and manufacturing sectors of the economy via ownership of over one dozen subsidiary companies. While having a large portfolio of subsidiary companies makes Exchange Income Corp. a well-diversified option for investors, what is really impressive about the company is where and how those subsidiaries operate.
On the aviation side of the company, many of the subsidiary companies operate or serve remote regions of the country. By way of example, Keewatin Air provides medevac services into Winnipeg from remote regions in Nunavut and northern Manitoba, while both Calm Air and Perimeter provide scheduled flights over that same area.
Provincial Aerospace is another company offering both scheduled flight services and Maritime surveillance to Quebec and the Maritimes, and Bearskin airlines provides both flight and cargo services between northwestern Ontario and Manitoba.
Turning to the manufacturing side of the company, Exchange Income Corp. provides an impressive array of manufacturing solutions, catering to everything from stainless tanks and high-pressure washer systems to cell phone tower construction and sheet metal products.
In short, the company offers a broad spectrum of subsidiary companies that all operate in a limited competitive environment that serve remote areas. This is a unique niche that puts Exchange Income Corp. in an enviable position where it can realize incredible growth prospects and generate cash flow.
Exchange Income Corp.’s quarterly update
Operating in a remote market while offering niche services can be incredibly rewarding, and that’s exactly what investors realized when Exchange Income Corp. reported results for the first fiscal quarter this past spring.
In the first fiscal quarter of 2018, the company reported net earnings of $8.6 million, or $0.27 per adjusted share. When compared to the same quarter last year, net income realized an impressive 55% improvement, leading CEO Mike Pyle to call out the most recent quarter as “one of the most significant and successful quarters in the company’s history.”
Impressively, those results aren’t even the most compelling reason investors should consider the company.
Exchange Income Corp. offers a very lucrative monthly dividend that pays a yield of 7.07%. The company has hiked the dividend a dozen times in the past 14 years, and given the ongoing strength and diversified nature of the business, there’s no reason to doubt that further hikes will follow in the future.
With the strong portfolio of diversified assets, an equally impressive regional moat around its businesses, and a very lucrative monthly dividend, Exchange Income Corp. is a great pick for nearly every investor looking for an income-producing stock with growth potential.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Demetris Afxentiou has no position in any stocks mentioned.