Mortgage broker and financial planner Mortgage Choice Limited (ASX: MOC) has seen its share price soar more than 29% over the past two weeks to hit a high of $2.15 earlier today.
At the time of writing, the share price was still up 4% at $2.08, after the company responded to an ASX query that it had no explanation for why the share price had jumped so much.
A dividend bonanza?
Mortgage Choice is likely to report its 2016 full year results (FY16) in mid-August, and analysts expect the company to report earnings per share of around 16.25 cents in FY16 and 17.35 cents in FY17.
After reporting a 15.5 cents fully franked dividend in 2015, a slight increase in the dividend is possible this year. That would place Mortgage Choice on a prospective dividend yield of around 7.7% – and near 11% when franking credits are included.
Shares are also trading on a relatively undemanding prospective P/E ratio of 12.6x for FY16. A bargain price, combined with a ripper dividend is more than likely the reason for the share price rise over the past two weeks.
It's not the housing sector
Interestingly, competitors, Australian Financial Group Ltd (ASX: AFG) and Yellow Brick Road Holdings Ltd (ASX: YBR) have seen their share prices fall 3.9% and 11.6% over the same period, suggesting it's not an industry-wide phenomenon.
Source: Yahoo Finance
All stocks offering mortgage broking could see their share prices rise if there was positive news about credit growth or the property market.
However, Mortgage Choice did state in February that it has seen an 'incredibly strong start to the 2016 calendar year', which bodes well for a record result when the company reports in August 2016.
Foolish takeaway
With both its mortgage broking and financial planning businesses headed for profit next year, now could be the perfect time to add Mortgage Choice to your watchlist – despite the recent strong gains in the share price.
