- Wolters Kluwer is a predictable company with predictable results.
- The dividend is 3.5% and increasing each year.
- Wolters Kluwer is a good long term investment.
Wolters Kluwer (OTCPK:WTKWY) (OTC:WOLTF) is an information solutions provider from The Netherlands. Wolters Kluwer is a predictable company. Big revenue growth cannot be expected, but the profitability is healthy and a dividend of 3.5% is good. Wolters Kluwer is a good long term investment.
Wolters Kluwer (x1M)
75% of the revenue is through recurring subscriptions and customers are "resilient" in keeping their subscriptions.
The main divisions of Wolters Kluwer are:
- Legal & Regulatory with an EBIT% of 31%
- Tax & Accounting with an EBIT% of 20%
- Health with an EBIT% of 25%
- Financial & Compliance Services with an EBIT% of 8%
Three quarters of revenue is recurring with subscriptions from loyal existing customers. This is a good indicator of future revenue and results. Wolters Kluwer aims for an organic growth of about 1% a year, which is modest.
Because revenue growth is limited, the dividend is the most important factor. Wolters Kluwer aims to increase dividend each year. Dilution will also be prevented with a buyback policy.
The paid dividends are 35% to 55% of the EBIT and lower than the available free cash flow. The dividend policy is viable and can be sustained.
Wolters Kluwer is a very predictable company with predictable revenue, predictable results and a predictable strategy. But boring is beautiful for the dividend investor.
With a dividend yield of 3.4% and a PE of 17.7 Wolters Kluwer is not an expensive stock and a worthy to keep for the long term.
Writing covered call options and (limited) uncovered put options can increase the yield.
Disclosure: I am long WOLTF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.