The rationale for investing in Israeli tech stocks is simple -
it is the most innovative high-tech nation in the world.
Last week, I noted the reasons why
Israel stands above all other nations when it comes
to the high-tech industry
Now, as promised, I want to give you the name of one of my
favorite emerging stocks in the high-tech world of "The New Silicon
As I mentioned several times over the past month,
every portfolio should include dividend-paying
stocks as part of a diversification strategy
. So when I came across a microcap Israeli tech stock with a
high-yield dividend of 9.7 percent, I was compelled to dig further
into the company.
Most investors associate dividend paying stocks with blue-chip
value companies with moderate growth and high-cash flow. But small
cap stocks with large dividends also have the ability to deliver
The benefit of buying small cap stocks with high dividend
payouts is the added exposure to capital gains in addition to
MIND C.T.I. Ltd. (Nasdaq: MNDO)
fits into this category like a glove.
With over ten years in the technology sector, MIND has quickly
evolved into a leading global provider of real-time, product-based
mediation, billing and customer care solutions for voice, data,
video and content services.
Last month, when Japan's earthquake rattled global markets, the
S&P 500 fell about 3 percent. The Nasdaq dropped 5 percent.
MNDO fell just 7 percent during the same period, but while the
broad indices were roughly flat for the month of March, MNDO jumped
more than 9 percent. That's pretty good resilience for a tiny
With a market cap of $61.8 million, little MNDO doesn't show up
on many traders' radar screens - especially because it's thinly
traded, averaging just over 136,700 shares traded daily.
That makes it exactly the type of small cap stock that we should
keep an eye on and think about buying when the opportunity arises.
We want to get into these types of companies before they receive
significant analyst coverage.
In MNDO's case, there are other strengths besides just a lack of
coverage. The company's income statement looks particularly
strong. Total revenues for 2010 were close to $20 million, an
increase of 14 percent year over year. Growth in revenues helped to
increase operating income from $2.2 million in 2009 to $4.8
million, or 25 percent of revenues, in 2010. Net income was $44.9
million or $0.26 per share.
The balance sheet also looks strong with a total cash position
of $20.5 million at the end of 2010. The company boasts profit
margins of 24.4 percent and return on equity of 20.8 percent.
Moreover, MNDO continues to grow its customer base at a rapid
Last week MNDO took a major step towards catching institutional
attention with the announcement that they have joined forces with
Israel's first mobile operator, Pelephone communication. Pelephone
has over 2.8 million subscribers.
For the investor who wants the potential for outsized capital
gains in small cap stocks that pay big dividends, MNDO is worth
As always, complete your own due-diligence to make certain that
a stock is right for your portfolio.