Collector's Universe Mints A Dividend Part 1: Coin Grading And The Future Of The Hobby

In this article I want to offer up my experience as a professional numismatist as well as a part-time appraiser of collectibles and related personal property. The average investor may not understand the core business of coin grading, how it has transformed, and where the hobby of coins and collecting in general might be going in the future. A proper understanding may make a more informed investment decision.
Collector's Universe Inc. (CLTC) is a company that caters to the need for third party grading of not just coins, but a number of other collectibles such as trading cards (your old baseball cards), paper money, comic books, and autographs. The focus here is on PCGS, their coin grading service. The overall market for certification of other collectibles is rather small in comparison and will be analyzed in my next article.
What makes the stock so interesting and compelling for the long-term dividend investor is the compelling dividend at just over 9%, compared to earnings of $7.5 million, on just over $60 million in sales. Nevertheless, that rate is fairly high and such an esoteric and niche business might suggest it is not sustainable in the long run. Does the business have a future? Let's take a look.
Why is third party grading important in this industry?
In the world of coins, grading is a subjective practice, not a science (though we would love it to be). It seeks to use a scale from 1-70 to grade a coin, pioneered by Dr. William Sheldon, a specialist of... Read more

Older articles featuring CLCT: