Cass Information Systems: A Dividend Growth Investing Hidden Gem


  • Cass Information Systems processes complex bills for big corporations. It has established itself as a leader in that niche. It's a "digital resources" investment play.
  • Cass has an impressive track record of profitable growth with demonstrated resilience during crises, which enables it to consistently raise dividends.
  • Cass qualifies as a target for dividend growth investing due to its capital efficiency, growth prospect, and dividend policy.
  • For a wide-moat multi-year compounder, Cass is currently undervalued relative to its 'digital resources' peers.
  • I do much more than just articles at The Natural Resources Hub: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Cass Information Systems: A Dividend Growth Investing Hidden-Gem

In this article, I'd like to discuss Cass Information Systems (NASDAQ:CASS) as a potential target for dividend growth investors.

A bank or a business service firm?

Cass has a 115-year-old history in banking. Today, it still wholly owns a subsidiary, i.e., Cass Commercial Bank. However, Cass also has another business segment - payment services, which nowadays overshadows the banking subsidiary. The payment services contributed some 67.7% of the total revenue in 2019, while commercial banking generated 32.3% (Table 1). As of February 19, 2020, the payment services hired 821 full-time and 246 part-time employees, while the commercial bank subsidiary only had 54 full-time employees and one part-time (see here).

Table 1. Selected financial information for each of the five years ended December 31, 2015-2019, modified from this source.

Core competency

For large corporations, paying their complex bills is an onerous task to be outsourced. For Cass, utilizing the latest technologies to process those bills for customers is its core business.

In fact, Cass is the leading provider of payment services to large U.S. corporations for their utility, telecom, financial, and transportation needs (see here). It provides payment and information processing services to large manufacturing, distribution, and retail enterprises. It provides a B2B payment platform for clients that require an agile fintech partner. It also uses an online platform to provide generosity services for faith-based and non-profit organizations for its faith-based customers.

Cass primarily focuses on processing payables and payables-related transactions, with four core competencies:

  • Data acquisition, i.e., the gathering of data elements from diverse, heterogeneous sources, and the building of complete databases for customers. Cass gathers vital data from complex and diverse input documents, electronic media, proprietary databases, and data feeds, including data acquired from vendor invoices as well as customer procurement and sales systems. Cass then assembles these vital data into centralized data management systems

Cass is just one of the many DGI ideas recommended by Laurentian Research. He manages an ~11%-yielding DGI strategy, in addition to three strategies for capital appreciation.

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This article was written by

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The best energy and mining stock ideas with multibagger potential

As a natural resources industry expert with years of successful investing experience, I conduct in-depth research to generate alpha-rich, low-risk ideas for the member of The Natural Resources Hub (TNRH). I focus on identifying high-quality deep values in the natural resources sector and undervalued wide-moat businesses, an investment approach that has proven to be extremely rewarding over the years.

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Disclosure: Besides myself, TNRH is fortunate enough to have multiple other contributing authors who post articles for and share their views with our thriving community. These authors include Silver Coast Research, ..., among others. I'd like to emphasize that the articles contributed by these authors are the product of their respective independent research and analysis.

Disclosure: I am/we are long CASS. 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.

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