Mullen Group Ltd. T.MTL

Ink Research

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Morning Report: Mullen Group trucks a hefty dividend

Today, we come across an industrial stock that has both an above average yield and sunny INK Edge outlook. Mullen Group supplies trucking and logistics services in Canada as well as specialized services including water management, fluid hauling and environmental reclamation for construction and resources industries. In 2011, oilfield services represented 65% of Mullen Group's revenue. More than 10 years later, Mullen has broadened its customer base with its Specialized & Industrial Services segment (which includes oilfield services but also serves environmental, construction, utilities and engineering) accounting for 18% of Q1's $456.9 million in revenue.

Earnings per share has been on the rise even in the face of higher costs. According to Refintiv, EPS for the 12-months ended March 2022 was 79 cents versus 71 cents a year ago. However, inflation is an uphill battle for the trucker. Nevertheless, the company seems ready to drive through the rising cost environment. In commenting on Q1 operating challenges, CEO Murray Mullen said, "The most pressing challenge, however, was surging inflation and higher fuel costs. Collectively these issues hurt margins and profitability in the quarter, setting off another round of pricing increases to our customers. These are difficult discussions to have but are absolutely required to drive margin improvement in future quarters." So far, the company is delivering the goods in terms of dividends for investors. On May 3rd it announced a 20% increase to its monthly dividend starting in June, moving it up from 5 to 6 cents. That generates a prospective dividend yield of 5.8%. Meanwhile, insiders have been buying as the stock searches for road back to its 52-week high of $14.48 set October 25th.