Autoscope Technologies Corp Offers Ultra-High Dividends & Ultra-Low Payout Ratio
Why AATC Stock Is Compelling
Technology stocks are known for providing early-bird investors with eyewatering gains, not dividends. And with interest rates on the move, gains from tech stocks are hard to come by. That said, here’s what makes Autoscope Technologies Corp (NASDAQ:AATC) so compelling.
Autoscope Technologies stock provides a safe, 7.3% dividend yield, and its share price hasn’t been phased by the tech stock sell-off that began more than a year ago.
Autoscope Technologies Corp develops and markets video and radar processing products for city, county, state, federal, private traffic, highway, and toll road management agencies around the world. (Source: “About,” Autoscope Technologies Corp, last accessed March 21, 2022.)
The company’s products are used to control traffic flow and reduce travel times, accidents, delays, congestion, air pollution, and fuel consumption. Its technologies analyze signals from sensors and transmit the information to management systems and controllers or directly to users.
Through its Image Sensing Systems Inc. (ISS) subsidiary, Autoscope Technologies provides various solutions to the intelligent transportation system industry.
Autoscope Technologies also acquires technology and engineering businesses. After it acquires a company, it helps the existing management team execute a business plan. (Source: “Business Acquisition Criteria,” Autoscope Technologies Corp, last accessed March 21, 2022.)
The early days of a tech company can be fraught with challenges, but Autoscope Technologies avoids that by only looking at companies that have been in business for at least five years and have sustained margins. The companies also have to be profitable, with pre-tax earnings of more than $500,000.
Autoscope Technologies Corp Reports Solid Q3 Results & Declares Dividend
For the third quarter ended September 30, 2021, Autoscope Technologies announced that its revenue fell by 48% year-over-year to $2.5 million. Its sales from royalties increased by 12% year-over-year to $2.5 million. (Source: “Autoscope Technologies Corporation Announces Financial Results and Dividend Declaration,” Autoscope Technologies Corp, November 15, 2021.)
The company’s net income came in at $613,000, or $0.11 per share, compared to third-quarter 2020 net income of $659,000, or $0.12 per share. Its third-quarter operating income was $941,000, compared to operating income of $886,000 in the prior-year period. Its cash balance increased to $8.5 million in the third quarter of 2021 from $8.4 million in the second quarter.
“We are very pleased with progress made in the ISS royalty business during the last quarter, which was driven in part by the introduction of pedestrian detection within our Autoscope Vision product line earlier in the year,” said Andrew Berger, Autoscope Technologies Corp’s CEO. (Source: Ibid.)
He continued, “ISS third quarter product sales were negatively impacted by labor shortages in highway construction, which caused delays in sale of ISS’s radar products. We expect labor shortages in the highway market to continue into the fourth quarter of 2021. As a result, we adjusted ISS operating expenses to align with sales while continuing to invest in new products and services.”
On the same day that Autoscope Technologies reported its third-quarter results, the company declared a third-quarter dividend of $0.12 per share. Since then, management has also declared a fourth-quarter dividend of $0.12 per share, for a yield of 7.3%. That dividend was paid out in February.
Autoscope Technologies Corp’s ultra-high dividend is safe: the payout ratio is just 41.7%. That’s far below the 90% threshold I like to see. This bodes well for the possibility of future dividend increases.
AATC stock’s share price, while not exactly setting Wall Street on fire, has been holding its own. That’s a far cry from what many tech stocks have been doing. As of this writing, Autoscope Technologies stock is up by 10% year-to-date and nearly 50% year-over-year. The S&P 500, meanwhile, is down by six percent year-to-date and up by 14% year-over-year. The tech-heavy Nasdaq is down by 11.7% year-to-date and up by just 4.5% year-over-year .
Chart courtesy of StockCharts.com
Moreover, with dividends reinvested, AATC stock has generated a 48.5% return over the last year. Over the same time frame, the S&P 500 generated 14% and the Nasdaq generated just 4.3%.
The Lowdown on Autoscope Technologies Stock
Autoscope Technologies Corp is a leading transportation system company with a solid balance sheet and growing international footprint. It reported wonderful third-quarter results that included high royalty payments.
Although the company has experienced supply chain delays in its highway segment (which is expected to continue in the near term), the adoption rate of its products has been accelerating. Until the global supply chain crunch is over and Autoscope Technologies begins reporting significant organic growth again, investors can take solace in AATC stock’s safe, ultra-high dividend.