Earlier this week I wrote a blog about the growing need for online security. Now it is time to explore a few companies that provide solutions to an ever more dangerous online world. Though this is a tech heavy realm, you may be surprised that you can find a dividend paying company in this online security category.
Intersections, Inc. (INTX) is a company that has its focus set on curtailing identify theft. Just a few days ago it announced that it had entered into a contract with Comcast, one of the largest providers of Internet connectivity in the U.S. Per the agreement, INTX will provide Comcast Internet customers with their online identify theft prevention solution Identity Guard. Identify theft is a real problem for Internet users and something almost everyone fears. Establishing this contract with a major player like Comcast will help the company grow its customer base and establish itself as an online ID theft solutions provider.
In terms of investing, INTX’s current dividend yield is at 3.7%. The payout ratio is 32% and its beta over a 5 year period rests at .17. The trailing Price to Earnings ratio rests slightly under 12. Remember, this company has a large credit monitoring and analysis operation. The reason why you have the dividend is that it’s not a relatively new software company that is throwing all their earnings back into R&D and general operations growth. With the growing need for online identify theft solutions, INTX is integrating a new growth component into their business model. People wish to be proactive in preventing ID theft problems and INTX is helping meet that need.
When you move away from individual Internet user needs, you look toward what is commonly referred to as the cloud. Cloud computing is a growing trend that will continue to grow at a fast pace in the coming years. Whether you realize it or not, if you’re using Yahoo! Mail or GMail, you’re most likely utilizing a form of cloud technology. That example is only the tip of the iceburg.
If the cloud will be a game changer in terms of how we gain access to certain applications, don’t you think that it will have some security implications? Of course it will. Cloud computing shifts the majority of processing and storage to a centralized location. Therefore, if someone hacks the main location, the implications for all users feeding off of that location are huge. If your computer gets a virus, it’s a bad day for you. If a cloud server gets a virus it’s a bad day for all users on that server.
Commtouch (CTCH) is an Israeli company that is providing a cloud computing security solution for cloud computing service providers. Their current software offering enables cloud based systems to stop spam and viruses that are distributed via email. CTCH processes 2 billion email messages daily and see their business growing 35%-40% annually. More recently they’ve entered into the web security realm that is focused on identifying malicious sites. Just recently this technology has been expanded to encompass mobile browsing.
CTCH is a small company. It has a market cap of around $77.5 million. The product offering of the company is very focused on a specific niche. Assuming that their technology keeps developing to meet the ever changing needs and dangers of online connectivity, the company should continue to grow as at the same or faster pace than the industry it operates in. It’s certainly the more risky pick of the two, but success would mean more upside.
These two stocks are a starting point in the realm of online security. Many more companies exist. As you can see, this investment area does offer some variety. INTX is a company many value investors would gratitate towards. When I first started my research I really did not expect to come across a stock that’s paying 3.7% annually in dividends. You never know what’s out there until you look.
Disclosure: No Position