"SRG Global Limited (ASX:SRG) Looks Interesting, And It's About To Pay A Dividend"

SRG Global Limited (ASX:SRG) is a company that has been making waves in the industrial services sector, and it's about to pay a dividend. As an income-focused investor, you might be wondering if this is a stock worth considering for your portfolio. Let's dive into the details and see if SRG Global Limited is a good fit for your investment strategy.

First, let's talk about the dividend. SRG Global Limited has announced an upcoming dividend of AU$0.025 per share, which is a 25% increase from the previous dividend of AU$0.02 per share. This is a significant increase and shows that the company is committed to returning capital to shareholders. The dividend is payable on March 6, 2025, and the ex-dividend date is February 20, 2025. This means that if you buy the stock before the ex-dividend date, you will be eligible to receive the dividend.

Now, let's talk about the company's financial performance. SRG Global Limited reported strong financial results for the full year 2023, with revenue growth of 26% to $809 million and a 42% increase in Net Profit After Tax (NPAT) to $31.8 million. This robust performance has likely contributed to the positive outlook among analysts. The company's ability to exclude one-off transaction costs and costs for exiting certain businesses from its calculations further highlights its operational efficiency and strategic decision-making.

One of the key factors driving the recent upward revisions in analysts' EPS (Earnings Per Share) forecasts for SRG Global Limited is the company's strategic transformation towards an earning profile offering more than two-thirds annuity/recurring earnings through its maintenance work. This shift positions the company for sustainable growth and provides a more predictable revenue stream, which is attractive to investors and analysts.

Another factor is the company's recent acquisition of ALS Industrial Pty Ltd (Asset Care) in February 2023. This acquisition complements SRG Global's strategy to grow recurring asset maintenance services, with 99% of Asset Care’s FY23 revenue generated from recurring, annuity-style maintenance services. This acquisition not only enhances SRG Global's ability to provide consistent and reliable maintenance services but also increases its capacity to cross-sell its services to existing customers.

However, there are potential risks associated with this strategy. One of the risks is the unstable dividend track record, as mentioned in the risk analysis section. Additionally, shareholders have been diluted in the past year, which could impact the company's financial health and shareholder value. The company has also filed a Follow-on Equity Offering in the amount of AUD 60 million, which could further dilute shareholder value. These risks need to be carefully managed to ensure the sustainability of the company's growth strategy.

In conclusion, SRG Global Limited (ASX:SRG) is a company that is worth considering for your investment portfolio, especially if you are an income-focused investor. The company's strong financial performance, strategic acquisitions, and contract wins provide a solid foundation for continued growth. The upcoming dividend of AU$0.025 per share is a significant increase and shows that the company is committed to returning capital to shareholders. However, it is important to be aware of the potential risks associated with the company's growth strategy and to carefully manage these risks to ensure the sustainability of the company's growth.