PayPoint plc ‘A fantastic market position and growing dividend’ says Gervais Williams

PayPoint

Diverse Income Trust plc (LON:DIVI) Fund Manager Gervais Williams caught up with DirectorsTalk to discuss portfolio company PayPoint plc (LON:PAY).

DirectorsTalk asked: PayPoint plc is transforming its business in shopping, eCommerce, payments and banking. It announced its intended acquisition of Appreciate Group for £83 million on 7th November. How do you view its progress now?

Gervais Williams commented:

“That’s interesting. I think the company is very overlooked, it has a lot of terminals in most of the corner shops across the UK and I think this is an area where, with post offices and banks closing offices, there’s more opportunity for them to take more market share in terms of payments. We see collecting of extra payments in the government as well, which you can easily do through the PayPoint terminal.

So, from that point of view, we think it’s got a fantastic market position, it’s continuing to grow and the Appreciate opportunity gives them further opportunity. What’s quite nice about it, is it is not just a sole business; it’s relatively resilient to recession but most particularly, it pays a good yield and we expect that dividend to grow every time.

That’s really the cornerstone of what the Diverse Income Trust is about, we look for companies which have good and growing income. As long as that income comes through then its share prices will eventually catch up. That’s where we are now, the valuations may have come down but the income is still coming through.”

In PayPoint’s half year results published on 24 November 2022, it declared ‘an increased ordinary interim dividend of 18.4 pence per share, consistent with our unchanged dividend policy, and representing an increase of 2.2% vs the final dividend declared on 26 May 2022 of 18.0 pence per share and an increase of 8.2% vs the interim dividend declared on 25 November 2021 of 17.0p pence per share. The dividend will be paid in equal instalments of 9.2 pence per share on 30 December 2022 and 6 March 2023’.

Nick Wiles, Chief Executive of PayPoint Plc, concluded on the results:

“In a challenging and unpredictable economic environment, the transformation of our business continues, reflecting a rebalancing towards growth opportunities and delivering improving returns to shareholders. Our compelling characteristics of strong cash flow, resilient earnings and growth mean we remain confident of the progress we are making in the transformation of our business and delivering expectations for the year.”

PayPoint plc is a British business offering a system for paying bills in United Kingdom, Ireland and Romania. It is listed on the London Stock Exchange under the EPIC code PAY.

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