Are you looking for a growing company that pays a bit of income as well? If so, you might want to look at Johnson Service (JSG:AIM).

It’s in the business of textile rental which includes supplying work and protective wear to over 40,000 customers including clients such as BMW. It also provides linen services for the hotel, catering and hospitality markets.

Selling its dry cleaning business in January this year seems to have paid off. Group revenue for the remaining textile rental business interests grew 19% to £138m in the first six months of 2017, due in part to some acquisitions the firm made in 2016.

Adjusted operating profit was up 20% to £18.6m and the half year dividend was lifted by 12.5% to 0.9p per share.

Benefiting from peer's actions

Johnson Service is currently benefiting from strategic changes at larger rival Berendsen which has been struggling due to various internal problems.

Firstly, Berendsen has pulled out of serving customers with less than £250 of weekly business – leaving Johnson Service to step in.

Secondly, Berendsen is now being taken over by French group Elis, so there may be another period where it is distracted by the new owner trying to make changes. The UK might even become less of a priority as it will only represent 15% of the enlarged Elis business by sales, based on 2016 numbers.

Outgoing chief executive Chris Sander says Johnson Service has been successful in gaining new customers, 1,200 this year, and also good at keeping them. He says Johnson Service has a 95% retention rate for customers; most of the 5% it loses is down to corporate insolvency.

Not sitting on its hands

While Johnson Service appears to be in a sweet spot, it isn’t only reliant on taking market share from Berendsen. For example, it recently bought high volume hotel linen business PLS which is viewed as a good move by investment bank Investec, extending coverage to Scotland and Northern England.

Investec forecasts the move will add around £5m in revenue with an additional £0.5m in earnings before interest and tax per year.

RBC analyst Andrew Gibb says the shares are trading at historic highs of 16.6 times forecast earnings. He claims this rating is warranted due to accelerating organic growth levels, acquisition benefits and internal investment. Johnson Service has a 2% prospective dividend yield.

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