A positive reputation is worth perpetuating.
One aerospace company has developed a positive reputation for paying “liberty checks.” It has paid five liberty checks to its shareholders over the past five years.
You can understand why a positive reputation centered on liberty checks is worth perpetuating. Since the first of the five rounds of liberty checks were paid in 2012, this aerospace company’s share price has nearly tripled.
The most recent liberty checks were paid last September. A $2,200 liberty check was paid for every 100 shares owned.
This company will pay more liberty checks. What’s more, the liberty checks will likely be larger than the previous checks. The business model nearly guarantees it.
A deep economic moat encircles this aerospace company. It is often the sole supplier of components for specific systems within an aircraft. Because of strict regulations, customers are unable to turn to a competitor to buy a knockoff replacement.
This deep economic moat promotes profit growth. The company’s annual EPS has quadrupled since 2009. Revenue growth has maintained a similar growth trajectory.
Growth is one thing; efficient growth is another.
This aerospace company not only grows, it grows efficiently. Its operating margin has expanded 300 basis points since 2014. Its net margin has expanded 900 basis points over the same period.
If you think a growth company that grows efficiently generates a lot of cash flow, you think right. Operating flow and free-cash flow also adhere to a similar growth trajectory.
Thanks to the new tax laws, the company’s trajectories for cash flow and earnings should steepen. Lower corporate income tax rates are key components of the new tax laws. The top corporate income tax rate falls to 21% this year. It was 35% in previous years.
Management expects the company to generate $70 million in additional cash in 2018 due to the lower income tax rate. They expect a minimum of $1 billion in operating cash flow this fiscal year.
Liberty Check: Arriving Shortly
EPS guidance has also taken flight. Management offered $15.61 as the midpoint for annual EPS at a meeting with analysts in February. EPS will almost double this fiscal year.
More EPS growth, more cash flow, more liberty checks.
The aerospace company’s next round of liberty checks could be paid as soon as June. It paid liberty checks of $25 per share in June 2014. The investor with 100 shares was issued a $2,500 liberty check.
Can this aerospace company really afford to pay such large liberty checks annually?
The answer is a resounding “yes.”
The business is high margin and continually generates mountains of cash. The company’s cash account approaches $1 billion as I write. When excessive cash accumulates, or when the company becomes “over-equitized,” in management’s words, it pays liberty checks to shareholders.
Past liberty checks have only enhanced shareholder value through additional income and subsequent share-price appreciation. I expect nothing less of future liberty checks.
This profitable aerospace company is one among many liberty-check payers.
I’ve unearthed 34 of these liberty-check payments in the past two years. The yields range up to 41% — 20 times the dividend yield of the S&P 500.
My latest liberty check discovery offers a yield 15 times the dividend yield offered by the market. The liberty check and its yield are available today.
But there’s a catch.
You need to act fast. The opportunity to collect your 15X liberty check expires soon.