There are more than 4.5 million hotel rooms in the United States. When you stay at any one of these rooms you can usually expect — no matter how many stars are next to the hotel’s name — a bed, a bathroom, a television, and a Gideon’s Bible.

While Gideon does distribute to these hotels, it’s just a small portion of its network. Gideon’s International translates the bibles into more than 80 languages and distributes it to more than 190 countries. In 2007 alone Gideon passed out about 77 million bibles. And since it first started giving them away more than 100 years ago, about 1.5 billion have been distributed.

I found a way to collect dividends on Gideon’s.

Not on the distribution, of course; that’s done by a non-profit religious organization. But the manufacturing is done by a public company listed on the Nasdaq stock exchange.

Founded in 1824, Courier Corporation (Nasdaq: CRRC) has been printing Gideon’s Bibles since 1938. Courier has been on an upswing since the beginning of 2010, but it’s still undervalued.

Courier had a disappointing year in 2009, with revenues shrinking to $248 million from $280 million and net losses widening to -$3 million from -$0.3 million the year before. But these negative numbers don’t tell the whole story. In 2009, Courier’s net numbers included non-cash impairment charges of $16 million and restructuring charges of $5 million. Excluding these non-recurring items, net income was $10.2 million. In fact, Courier was cash-flow positive in 2009.

And the company’s situation has been steadily improving since last March, which was the last time it reported quarterly net losses. In the quarter ending December 2009, revenue at Courier increased +6% year over year to $63.1 million. Net income for the period also rose, to $2.8 million from $0.7 million year over year. Analysts at Ferris Baker Watts expect that Courier’s earnings per share will increase in 2010 to $0.97.

In 2009, the company’s shares fell by about -15%. However, they’ve started to make up some ground this year. While the S&P has been about flat, Courier’s shares have advanced +10% since January. The current price of about $15.40 is still a good margin off the share’s 52-week high of $18.41.

Courier currently pays a $0.21 per share quarterly dividend, and with recent share prices, this payout equates to a dividend yield about 5.5%. This is still about twice the company’s 5-year average yield of 2.8%.  In addition, the company has hiked its dividend fourteen times in the past fifteen years, for a total increase of +1000%, or +35% per year. The dividend appears fairly secure as net income of $2.8 million in the most recent quarter covered dividends paid of $2.5 million for a 90% payout ratio.

While the company does publish books, manufacturing — for itself and other publishers — provides the bulk of its revenue, more than 80% in its most recent quarter. In fact, Courier is North America’s third largest book manufacturer and has a customer list that includes McGraw-Hill (NYSE: MHP), Random House, and of course Gideon’s International.

Courier has a market capitalization of $170 million but only $8 million of debt — just 5% of shareholder equity. This low debt level should allow the company flexibility going forward and is a huge competitive advantage if uncertainty in the capital markets persists. The company also has listed about a half million dollars in cash on hand as of December 2009.

Courier has shrewdly made improvements and investments that will pay off in this new, lower revenue environment. Last year the company completed several equipment upgrades at two of its printing plants, which should reduce capital expenditures going forward and, Courier believes, increase competitiveness and efficiency. It’s also implemented cost-cutting measures during 2009, including a staff reduction of about 12%.

As a small company on the rebound, Courier provides excellent upside potential. Its current dividend is robust and has a history of excellent growth.

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