Home Capital Group (TSE:HCG) identifies and lends to prime mortgage borrowers who are turned away by the bigger Canadian banks and returns capital to shareholders through dividend increases year over year, says Michael McCloskey, President and Founder of GreensKeeper Asset Management Inc.
“These are people who may have had an issue with their credit in the past, but a lot of them are new immigrants to the country who haven’t established a credit history in Canada. Even Americans coming to Canada sometimes won’t have an established credit history here, and the big banks won’t lend to them. Home Capital has made a business over the last 25 years lending to that segment of the market,” said McCloskey.
While McCloskey agrees that the Canadian housing market is expensive, he says that Home Capital proves a prudent investment once one researches and understands the company. Increased dividends and a strong CEO also poise Home Capital for growth, McCloskey says.
“The Founder and CEO, Gerry Soloway, is ‘the maestro,’ as I call him. He is still running the business, and for a business that’s trading on nine times earnings, they’re the biggest player in this space by far,” McCloskey said. “If you look at their historical financials, the company has delivered dividend increases year after year. They can really expand their market share in Canada.”
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