DirectCash Payments Inc (DCI.TO)

10% dividend yield. He ended up not pulling the trigger on this. The dividend is a risk. They need to be able to pivot into new business lines. He thinks the dividend is not as sustainable as you think over the longer timeframe.

11.5% yield. It is a very strong buy at these levels. They have operations in Canada, Australia and United Kingdom. They had problems in the winter in Australia and people are jumping on that to predict problems for them globally for an extended period of time. He feels it is a temporary problem in Australia and the other two countries are having good results right now. The payout ratio is reasonable.

Took it on the chin this summer, largely on concerns of what has been happening in Australia. Thinks these are mis-founded concerns. They introduced Tap & Go. Instead of using your credit card, and typing it in, you can just tap it in, which had a significant impact on the use of ATMs in Australia. Management estimates that there is about a 10% reduction in transactional volumes in Australia, so during Q2 they pushed about a 6% price increase in Australia, which helped to mitigate some of that slow down. Also, pushed through a 20% price increase in Canada, following suit of what the banks had done, so we are going to see the full impact of that in Q3. Thinks it is going to be pretty decent. The company is very cheap. Dividend is sustainable. At the end of the day he thinks this is going to be a great long-term performer.

Trading at about 5.5X EBITDA for a company with low CapX, high free cash flow and recurring cash flow. They made some acquisitions. The biggest ATM network in Canada and Australia, and the 3^rd biggest in England. Through their Threshold acquisition they manage the exchange network which manages transactions at thousands of ATM machines. Dividend yield of 12.12% is sustainable with a payout ratio under 60%. In the next quarter and going forward you are going to be seeing increases year-over-year in profitability.

11% yield so be careful. He prefers the banks, where there is more return over time with less risk.

Is an unloved trade. Has been hit hard in the last two months by short sellers. They run the exchange network. The tap and go system for credit and debit cards has diminished the use of cash, which has hurt them, especially in Austrailia. He thinks the market has overreacted. Has recently increased dividend to 11% and he thinks it is sustainable.

Their last quarter came out and their business dropped a fair bit. The market became fairly spooked. Their payout ratio came way up. The market is kind of telling you that it thinks they are going to cut the dividend. He has confidence in the management team that they are doing all the things they need to as far as diversifying their business away from some of the areas where they have big exposure to before. It will probably take a couple of quarters before this gets out of the penalty box. 11% dividend yield makes him a little nervous.

It is hard to figure out exactly what seems to be happening. People who tap to pay for things, might be taking a bigger bite out of the ATM world than we think. In their most recent quarter, when you look at their payout ratio as a proportion of their overall cash flow, it suddenly went from 60%-65% to something like 85%. For anybody who is running a dividend fund that is like a switch and has to go from their portfolio. Feels that a bunch of the big dividend funds have had to dump the stock in the last 6-8 weeks. He is no longer on the bandwagon for this company. Dividend yield of 11%.

The stock is hitting lower lows. The dividend is attractive and the payout ratio is extremely low. It generates a huge amount of free cash. The market got spooked. They are leaders in Canada and also are in Australia and the UK. Cash Store going bankrupt is old news. It is a deep value play and an income play. There is still upside. They are paying down their debt quickly.

The yield is high and business is good. They are increasing ATMs. One day we will move to a cashless society and that will hurt them. Their margins dropped below 50% and it is not a trend he would like to see continue.

Sometimes the yield is high and is a red flag because they’re expected to cut, but he doesn’t think that is the case here. Has a little problem with this over a long period of time. Possibly ATMs are going to be a declining business. We are getting more and more of a cashless society, which to him would mean the usage of the ATMs drops. Yield of around 9%.

Likes this name. A provider of ATMs in Canada, Australia and the UK. Hasn’t done particularly well as of late, because people were disappointed in the latest quarterly numbers. There was a slowdown in transaction volume in Australia. Last year Australia introduced “Tap & Go”. When it came into Canada several years ago, it had a 3% impact over 3 years on transactions. In Australia, almost as soon as it was introduced, it had about a 10% impact. That had not been anticipated by the company. Management felt this was a one-off downward movement and thinks it is sustainable at these levels. This is “attrition rate” in ATMs versus their ability to grow the business. He is betting on the growth of the business. 9% yield is sustainable.

Has a Short position, basically because their fundamental business, non-bank ATMs, is in decline. There is a lot of competition and people are using other payment methods. Expects the decline, at some point, is going to accelerate. When that happens, the 8.8% dividend will be unsustainable.

Was disappointed with the recent results. The stock has gone down a fair bit. Feels strongly that management is doing a good job. Have had a difficult environment. Had to manage a number of different hurdles in the past and have always successfully done it. Probably looking to add at some point in time. Feels the dividend is fairly secure at this level. He would like them to stabilize their business and continue to grow. Seems like a lot of the disappointing results were around the Australian operations.

Still thinks this is undervalued and has recently been buying at around $17. Got hammered a couple years ago. Earnings were actually fine, but there was a report that implied there was some accounting issues. Really attractive yield of 8%.