Keeping an eye on Silver Chef

The hospitality equipment finance business is one of the most interesting on our income watchlist.

Summary: Silver Chef had an excellent year in 2015, with its share price growth and strong dividend leading us to add it to the income first watchlist. The hospitality financing business needs to purchase assets to rent out and these depreciate over time, making SIV a capital-intensive operation. While its balance sheet is strong, the business relies on strength of the hospitality and construction sectors for growth. Given SIV has high demands on its cash flow for growth, I’d like to see a higher dividend yield.

Key take out: SIV’s yield looks pretty healthy, but it remains on the income watchlist until cash flow can cover more of the company’s reinvestment.

Key beneficiaries: General investors. Category: Shares.

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