RE:Could Easily Raise DividendLet's look at it more quantitavely.
First, with an average loan receivables of about $17.5 million in Q1/16, Inspira generated just over $800,000 in interest and fees..
Annualized, that amount of loan receivables would generate about $3.2 million in revenues.
That is, an annual yield of a about 18% ( note that they are optimizing their portfolio ).
Based on Q1/16, operating profit would be about $1.3 million ( $327,000 times 4) or an operating profit margin of 40%.
The current payout ratio is therefore about 55% ( $800,000 div by $1.3 million).
Now, let's assume that they deploy $10 million of the $14+ million in cash currently on the balance sheet .
Annual revenue yield would be about $1.8 million which, at 40%, will generate an operating profit of about $700,000 per year.
In this scenario, annual operating profit will become $2 million ( $1.3 m + $0.7 m ) and the payout ratio drops to 40%.
A third source of operating profit will come from the new software billing subsidiary.
It has $3 million in contracted revenue to date.
Lets assume that annual operating sales increase to $6 million.
Software companies also have very high gross margins and high levels of recurring sales.
I will assume that this subsidiary will generate a 40% operating profit margin which computed to $2.4 million per year.
In this scenario, annual operating profit becomes $4.4 million and the payout ratio drops to less than
20% of disposable cash flows.
So, there is considerable scope to permit a dividend increase in 2017.
On a per share basis, Lnd operating profit is currently about $0.035 per share.
This will increase to $0.055 per share under scenario 2 and to about $0.12 under scenario 3.
As management states that we will deploy more of the current large cash position and as we have closed the software acquisition , Scenario 3 has a substantial probability of being met