Collectors Universe: The Dividend You Don't Want To Collect For Long

Collectors Universe Inc., (Nasdaq: CLCT), is one of the few companies that brings collecting and investment together, but that doesn't mean that it deserves a spot in your portfolio. I should know; I was a coin dealer for over a decade.
Company Overview
Collectors Universe owns companies that authenticate and grade collectible coins, sports cards and other memorabilia. Of these companies, PCGS, its professional coin grading company, is by far the most important and is responsible for the vast majority of the company's annual income. About 68.2% to be precise.
Collectors and dealers send their coins to PCGS and pay a fee to have the coin authenticated and assigned a grade designating the quality of the coin. PCGS then places the coin in an airtight plastic holder to protect the coin and allow it to be displayed.
PCGS virtually has a monopoly on the coin grading business. There are only about a dozen companies that grade coins but they are not all the same. There's PCGS and NGC and then there's everyone else. Most professional dealers and serious collectors simply don't want graded coins unless they are graded by one of these two companies, with PCGS being the more popular of the two.
Inability To Grow Core Business
The biggest problem the company faces is its limited growth prospects. Coin collecting and professional coin dealing is a limited market. PCGS virtually owns the market already. The only way the company could grow their core... Read more

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