Six Stocks That Investors Should Look For Dependable Income

Six Stocks That Investors Should Look For Dependable Income

The below-mentioned stocks have generated strong income in the recent past. Further, these stocks have consistently paid good dividends to their shareholders.

Commonwealth Bank of Australia (ASX: CBA)

Commonwealth Bank of Australia (ASX: CBA) is one of the top leading banks in Australia. CBA is currently on its path of becoming a simpler and better bank. In the first half of FY19, CBA reported cash NPAT of $4,676 million, which was 8.3% higher than its previous half as depicted in the figure below.

Cash NPAT Summary (Source: Company Reports)

 

Despite a difficult operating environment, CBA was also able to produce robust business fundamentals in the third quarter of FY19. In the Australian equity market, CBA is known for providing good returns to its shareholders in the form of dividends.

CBA’s dividends and payout ratio (Source: Company Reports)

For the first half of FY19, the Board determined an interim dividend of $2.00 per share, representing a dividend payout ratio of 74.3% of cash NPAT. On the stock performance front, CBA’s stock has provided good returns to its shareholders, appreciated by 18.73% in last six months.

Due to robust fundamentals and good track record of dividend payments, CBA can be considered as a dependable income stock.  At market close on 19th June 2019, CBA’s stock was trading at $82.300, up 1.044% during the intraday trade, with a market capitalisation of circa $144.19 billion. The stock is trading at a PE multiple of 15.870x, with an annual dividend yield of 5.29%.

Smartgroup Corporation Ltd (ASX: SIQ)

Smartgroup Corporation Ltd (ASX: SIQ) is primarily involved in providing employee management services, including salary packaging and fleet management services to its clients in Australia. In 2018, the company achieved strong financial growth, which includes revenue growth of 18% and NPATA growth of 22% as compared to 2017. With growth across all operational metrics, the company was able to deliver significant returns to its shareholders in the form of dividends. For the full year 2018, the company paid fully franked dividends of 41.5 cents per share, which was 19% higher than the previous year. The company has a good track record of paying dividends to its shareholders, as depicted in the figure below.

Dividend Summary (Source: Company reports)

 

With strong financial growth and good dividend payment history, SIQ’s stock can be considered as a dependable income stock.

On the stock performance front, SIQ’s stock has provided a return of 4.60% in the last three months. At market close on 19th June 2019, SIQ’s stock was trading at $8.800, up 0.917% during the intraday trade, with a market capitalisation of circa 1.15 billion. The company’s stock is trading at a PE multiple of 18.670x, with an annual dividend yield of 4.76%.

The Star Entertainment Group Limited (ASX: SGR)

Australia’s leading gaming and entertainment company, The Star Entertainment Group Limited (ASX: SGR) recently witnessed robust earnings and strong cash generation in the first half of FY19. The company witnessed a 65.9% growth in its statutory EBITDA and 351.4% growth in its NPAT. During the period, the company was able to decrease its operating costs by 3.9% on pcp.

The company recently declared an interim dividend of 10.5 cents per share, which is 40% higher than the previous corresponding period (pcp), reflecting strong business performance, planned investments and cash generation during the period.

In the past six months, the company’s stock has declined by 11.06% on ASX as on 18th June 2019. At market close on 19th June 2019, SGR’s stock was trading at $4.070, up 3.299% during the intraday trade, with a market capitalisation of circa $3.61 billion. The company’s stock is trading at a PE multiple of 13.270x, with an annual dividend yield of 5.96%.

Alumina Limited (ASX: AWC)

A metals and mining company, Alumina Limited (ASX: AWC) currently owns a direct 40% interest in AWAC’s global Tier 1 assets and has a strong, transparent cash flow derived from growing balanced markets. In FY2018, the company’s quality assets delivered outstanding outcomes, resulting in a strong NPAT growth of 87%. The company reported NPAT of US$635.4 million and net cash receipts from AWAC of US$678.2 million. In terms of dividends, 2018 was a record year for the shareholders. The Board declared a final dividend of US$14.1 cents per share (cps), fully franked, up 52% on 2017. For 2018, the company paid a total dividend of US$22.7 cents per share.

Currently, the company has a high annual dividend yield of 12.99% (as per ASX). In the past six months, the company’s stock has provided a return of 9.55% as on 18th June 2019. At market close on 19th June 2019, the company’s stock was trading at a price of $2.450, with a market capitalisation of $6.94 billion. The stock is trading at a PE multiple of 7.700x.

IOOF Holdings Limited (ASX: IFL)

IOOF Holdings Limited (ASX: IFL) is a major financial services company in Australia. Despite facing strong headwinds rising from the scrutiny of the Royal Commission, the company was able to produce a solid financial result in the first half of FY19.

The company had reported statutory NPAT of $135.4 million in the first half FY19, up 200% on the previous corresponding period. Further, the company has reported underlying NPAT of $100.1 million, up 6% on the previous corresponding period (pcp). During the half year period, the company earned underlying NPAT of $100.1 million and declared a fully franked dividend of 25.5 cents per share which was at the higher end of IFL’s dividend payout ratio policy of 60–90%. Currently, the company is having a dividend yield of 10.19% (as per ASX).

In the past six months, IOOF Holdings’ stock has provided a return of 6.19% as on 18 June 2019. At market close, the company’s stock was trading at A$5.220 with a market capitalisation of A$1.81 billion. The stock is trading at a PE multiple of 10.130x.

WAM Capital Limited (ASX: WAM)

An investment management company, WAM Capital Limited (ASX: WAM) reported a decline of 9.3% in its investment portfolio for the half year ended 31 December 2019. During this period, the equity market volatility increased, and slow economic growth was observed in the major global markets.

Despite witnessing significant volatility in the equity market, the company’s Board declared a fully franked interim dividend of 7.75 cents per share.  From 1999, the company has paid $2.23 per share in fully franked dividends to shareholders as described in the figure below.

In 2019, the global equity markets are performing strongly with US stock indices recording their best four-month starter to a calendar year in decades. In the month of April, the S&P 500 Index increased by 4.6% and the MSCI World Index increased by 4.5%. In the month of May 2019, WAM leaders investors portfolio increased by 11%.

In the past six months, WAM Capital’s stock provided a negative return of 6.45% as on 18th June 2019. At market close on 19th June 2019, the company’s stock was trading at $2.020, with a market capitalisation of $1.46 billion.


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