Olympia Financial Group (OLY.TO)

Doesn't follow, so he can't really give an answer as to whether the dividend is sustainable. Yield of 6.35% isn't terrible. A really high yield of what a company earns is a warning sign, as the company will have to go into debt to sustain the yield.

He doesn't follow this. Pays a not-terrible 6.3% dividend, though really high yields are a warning sign. Can't evaluate this; doesn't know it enough.

OLY reported a 6% sales decline year-over-year, and net profits declined 26%. Its service revenue growth increased modestly, driven by higher activity in areas like investment account services, but its trust, interest, and other income, segment declined due to lower interest rates on trust fund placements, and this impacted its top-line. Its sales and profit declines mostly reflect continued pressure from lower interest rates, but it continues to have an attractive yield of 6.3%, margins are slipping, but still elevated, and free cash flow is decent. We think it is an attractive name long-term, and we would be comfortable holding and slowly adding here.
Unlock Premium - Try 5i Free

OLY’s earnings are quite sensitive to the movement of interest rates, with rates coming down, earnings could be under pressure in the near term. This sensitivity to interest rates is inherent and quite common among financial companies. In the near term, OLY’s earnings could face a headwind due to a decrease in rate and, therefore, limited prospect of significant dividend growth. That being said, OLY has done really well over the last interest rate cycle. Also, the company’s service revenue is more predictable. This is an inherent risk of investing in financial companies. OLY is a small cap and quite under the radar to most investors, but its management track record is really impressive, we like the name here and would be comfortable to hold over the long term.
Unlock Premium - Try 5i Free

Higher interest income would definitely be a tailwind for OLY’s business as interest income flows straight to the bottom line. For example, in FY2023 interest income grew 100%, and now accounts for around 50% of the company’s total revenue. In a low interest rates environment, the business may not do sensational, but would likely still be just fine. In the past 10 years, interest rates were quite low, but OLY’s operating results were still quite healthy and consistent. We may not consider OLY as a compounder as the company did not reinvest much of its earnings to grow, but we would certainly consider OLY as a high-quality, capital light business that would consistently raise dividends over time. We would be comfortable owning OLY over the long term.
Unlock Premium - Try 5i Free

It is very ill-liquid so he hasn't bought it. However for a small retail investor it has great growth and good valuation along with a management team that has done well. Canadians have a wide array of larger cap financial stocks to choose from and tend to forget the small cap financials so it is good to find these specialty lenders. It is up 36% in a year.

Business is certainly good. 
OLY has strong insider ownership, good growth in earnings, solid cash flow and a good balance sheet. 
Revenue rose 47% last year, with interest and trust income up more than 100%. 
Its small size adds risk, and no analysts cover it. 
But the dividend has doubled since 2017, it is cheap, and shares are up 53% in a year. 
It is hard to argue against it right now.  
Unlock Premium - Try 5i Free

Very well run, kind of niche financial company. Very sharp management that knows how to make money. They paid a dividend, which may explain the drop in the share price. Not a huge growth business, but pays a regular dividend of around 7%. If you are looking for income, you are well served.

A small trust company operation. Have done quite well in Calgary. Just declared a special dividend. If you buy this stock now, you are not going to get special dividends all the time and you are back into a relatively illiquid stock. The stock will probably go right back to where it was trading before, once the dividend is paid. If you buy you better be ready to hold it for a long time.