The shareholders have two avenues to make money, one is via capital appreciation, and other is via the dividend distributed by the company. The Dividend payment is part of the management capital allocation decision-making exercise. The decision on the quantum of dividend distributed depends on the company’s current earnings and future cash flow needs. In the current low-interest rate scenario across the world, investors include dividend-paying stocks into their portfolio. Let’s have a look at two healthy dividend-paying stocks.
Australia and New Zealand Banking Group Limited (ASX: ANZ)
The banking major reported an operating income of $19,214 million for 2018 vs. $19,816 million in 2017. The earnings per share for 2018 was 223.4 cents vs. 232.7 cents in 2017. The company paid a dividend of 160 cents (fully- franked) in 2018 maintaining the same dividend as paid in 2017 (fully- franked). A total of $4.6 billion was paid as dividends to the shareholders resulting in a dividend pay-out ratio of 79.5% of cash profit this was above the company’s target fully franked dividend pay-out ratio of 60-65%.
ANZ’s Financial Performance (Source: Company Report)
The current dividend yield of the company stands at 6.01% (as reported on ASX). The company has paid a total dividend of $8.39 in the during the period 2014 to 2018. It resulted in a total dividend return to a shareholder of 27.13% over the four years. At the same time, the share price has delivered a negative return of 8.86% (assuming share purchased on 30 September 2014 and held through 30 September 2018).
The stock of ANZ last traded at $26.35 as on 15 March 2019, with a market capitalisation of circa $75.76 billion. The stock has provided a return of 7.34% in the past three months.
Tabcorp Holdings Limited (ASX: TAH)
The Australian gaming company has reported its 1HFY19 results. The company’s revenues for 1HFY19 came in at $2,787.4 million vs. $1,338.1 million in 1HFY18 reporting an increase of >100% on pcp basis. The EBIT from continuing operations before significant items came in at $404.7 million vs. $191.3 million reporting an increase of >100% and a statutory profit of $182.5 million Vs. $24.6 million pcp. The company declared a fully franked interim dividend of 11.0 cents. The current dividend yield stands at 4.52%.
Source: TAH’s Five-year Review (Source: Company Report)
Let’s have a look at the company’s dividend pay-out for the past four years (2014 to 2018). The company has paid a total cumulative dividend of $1.36 from 2014 through 2018. During the same period, the share price has appreciated from $3.36 in 2014 to $4.46 in 2018 (as reported in 2018’s annual report data). This resulted in a total capital appreciation of 32.73% and a dividend yield of 40.47% during the same period.
The stock of TAH last traded at $4.670 as on 15 March 2019, with a market capitalisation of circa $9.39 billion. The stock has provided a negative return of 8.64% in the past three months.
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