Recent Updates on 4 Financial Sector Stocks with juicy dividends – SUN, IAG, QBE, MQG

Australia’s financial services sector is one of the largest contributors to the national economy and remains competitive and profitable amidst a strong regulatory system and resilient in face of global shocks. Several banks and companies in the financial sector also offer their shareholders attractive dividends, which are essentially a portion of their corporate earnings. The willingness to pay steady dividends over time is indicative of both financial strength and promising future prospects for the company. Let’s take a close look at the following four financial sector stocks to look out for juicy dividends.

Suncorp Group Limited

Queensland, Australia-based Suncorp Group Ltd (ASX: SUN) is engaged in the provision of financial services including retail and business banking, life and general insurance, superannuation and funds management services in New Zealand and Australia. The Group’s market capitalisation is around AUD 17 billion with ~ 1.3 billion shares outstanding. On 19 August 2019, the SUN stock was trading at AUD 13.030, down 0.534% by AUD 0.070 with ~ 1.72 million shares traded (as at AEST: 2:20 PM). Besides, SUN has generated a positive return of 6.43% YTD. It has an annual dividend yield of 5.34%.

Lately, Suncorp Group’s Director Ian Hammond acquired an Indirect interest in the company upon an on-market purchase of 5,000 ordinary shares at a value consideration of AUD 13.50 each.

The Group recently released its Corporate Governance Statement 2018–19, on 7 August 2019, outlining its approach to corporate governance and its principal governance practices, that are regularly reviewed to reflect changes in law, and developments in corporate governance and community expectations. Some of the key governance developments for the group during the one-year period included Board renewal, increased focus on customers, establishment of New Board Customer Committee, embedding the Banking Executive Accountability Regime and responsible remuneration changes. The Corporate Governance model of the Group is illustrated below:-

Suncorp also released its Responsible Business Report 2018–19 detailing its approach, progress and future commitments to building a resilient and sustainable organisation that values customer, shareholder and stakeholder outcomes. The key highlight of the year 2018-19 was that the Group delivered total dividends to ordinary shareholders of 78 cents per share, besides other achievements like a consumer net promoter score of +5.0, maintenance of gender parity in its leadership roles and further reduction in greenhouse gas emissions by 6%.

Organisation & Key Personnel Changes On 7 August 2019, the Group announced the establishment of a new Customer and Digital function, to be led by Lisa Harrison, who would become Suncorp’s Chief Customer and Digital Officer, and the division would be dedicated to developing innovative, digital-first customer propositions, building on Suncorp’s existing expertise. Moreover, Suncorp is aligning its Australian contact centres, stores and intermediary distribution teams with its Banking and Insurance operations. CEO Customer Marketplace Pip Marlow would be resigning end of August 2019.

Insurance Australia Group Limited

Insurance Australia Group Limited (ASX: IAG) is a Sydney, Australia-based international general insurance group with operations in Australia, New Zealand, and Asia. It provides a range of personal and commercial insurance products, primarily motor vehicle and home insurance to over 8.5 million customers. Insurance Australia Group has a market capitalisation of around AUD 18.12 billion with approximately 2.31 billion outstanding shares. On 19 August 2019, the IAG stock was trading at AUD 7.64, down 2.551% by AUD 0.200 with ~ 1.8 million shares traded (as at AEST: 2:23 PM). Besides, the IAG stock has delivered a positive return of 13.46% YTD. It has an annual dividend yield of 4.08%.

On 12 August 2019, IAG Managing Director and CEO Peter Harmer announced the appointment of Peter Horton as Group General Counsel, with his tenure commencing around end of 2019.

In its most recent Corporate governance statement 2019, the Group laid out its framework which essentially includes focussing on its customers, behaving legally and ethically, creating a culture that enables the people to be their best and deliver world-leading customer experiences, remuneration policies and practices; risk management framework and continuous improvement approach.

Investor report FY19 Highlights- On 8 August 2019, the Group released its Investor Report for the financial year 2019 (FY19), posting Gross written premium (GWP) growth of 3.1%, which was largely rate-driven and a higher underlying insurance margin of 16.6% (14.1% in FY18), that was achievable  from improved business performance (~125 basis points) along with favourable quota share effect.

In addition, the Net profit after tax for the year amounted to $ 1,076 million, including profit on sale of Thailand operations of over $ 200 million. There were $ 931 million of cash earnings (FY18: $ 1,034 million).

The Group also paid out 70% franked final dividend of 20 cents (FY18: 20 cents, 100% franked while a full year dividend of 32 cents (FY18 : 34 cents), leading to a cash payout ratio of 79.4%.  Insurance Australia Group maintained a strong capital position with a CET1 ratio of 1.31, above benchmark.

QBE Insurance Group Limited

QBE Insurance Group Limited (ASX: QBE) is an insurance company underwriting various forms of industrial and commercial and insurance policies, apart from individual policies. The Company provides its services both nationally and globally.

QBE Insurance Group’s market capitalisation stands at around AUD 15.83 billion with ~ 1.31 billion shares outstanding. On 19 August 2019, the QBE stock was trading at AUD 12.035, down 0.042% by AUD 0.005 with ~ 1.7 million shares traded (as at AEST: 2:23 PM). In addition, the QBE stock has generated positive returns of 22.23% YTD and 6.36% in the last six months. It has an annual dividend yield of 4.4%.

On 19 July 2019, QBE Insurance Group informed that the Ministry of Justice in the United Kingdom had introduced a change, on 15 July 2019, in the statutory discount rate used in the determination of lump sum payments with respect to personal injury claims in the UK. In accordance with that, QBE Insurance Group, after having assess the significance and possible effects of this change, announced to the market that the adoption of the revised statutory rate of -0.25% is expected to increase the one-off in the Group’s net central estimate of outstanding claims liabilities of ~$ 60 million. Therefore, the impact would be reported as an adjustment in the Group’s 1H FY19 and FY19 statutory results, in accord with prior Ogden adjustments.

Earlier on 24 June 2019, the Group announced the simplification of its reporting segments from five to three as below-

  • Asia and European Operations together comprise “International”;
  • Pacific and Australian & New Zealand Operations together form “Australia Pacific”; and
  • North America will continue as is.

These segment reporting changes would not impact the Group’s overall results.

On 15 Aug 2019, QBE announced to the market on the senior management changes. The company appointed Todd Jones as the new CEO NA, with Russ Johnston deciding to look for prospects outside QBE. Further, the company also informed the market on the dividend of AUD 0.25 to be paid on 4 Oct 2019, with Ex-date and record date being 22 Aug 2019 and 23 Aug 2019 respectively, the dividend is 60% franked.

Macquarie Group Limited

Australia-based Macquarie Group Ltd (ASX: MQG) is a global diversified financial group offering banking, financial advisory, investment and funds management services including cash management, wealth management and private banking, life insurance, securities brokerage, corporate debt financing, real estate funds management, real estate development financing, foreign exchange services and others. With a market capitalisation of around AUD 40.35 billion and ~ 340.38 million shares outstanding, On 16 August 2019, MQG was trading at AUD 121.780 edging up 2.733% by AUD 3.240 with ~ 390,430 shares traded (as at AEST: 2:39 PM). Besides, the MQG stock has delivered a positive return of 10.94% YTD.

Recently, Macquarie Group Limited increased its shareholding in New Century Resources Ltd on the purchase of 59,272,898 fully paid ordinary shares, translating into a voting power of 10.22%.

In its recently disclosed 2019 Annual General Meeting Presentation, Macquarie Group elaborated on its FY19 Highlights, overview of FY19, 1QFY20 update and the outlook ahead. A snapshot of the FY19 performance is given below-

The company also informed that its operating groups were performing in line with expectations, with their contribution in the first quarter of the 2020 financial year (1Q FY20) broadly in line with the first quarter of the 2019 financial year (1Q FY19).

The group start to the financial year 2020 includes key highlights such as AUD 552.7 billion of assets under management with Macquarie Asset Management (MAM) as at 30 June 2019, up 2% on 31 March 2019, predominately driven by market movements. Besides, the Corporate and Asset Finance’s (CAF) asset and loan portfolio was valued at AUD 21.5 billion at 30 June 2019 and the Group’s Banking and Financial Services’ (BFS) total deposits stand at AUD 53.1 billion.

Moreover, Macquarie Group’s financial position comfortably exceeds the Australian Prudential Regulation Authority’s (APRA) Basel III regulatory requirements, with Group capital surplus of AUD 5.0 billion at 30 June 2019, a Bank CET1 ratio of 12.0% (Harmonised: 14.9%) and a Leverage Ratio of 5.4% (Harmonised: 6.0%). MQG has an annual dividend yield of 4.85%. On 19 June 2019, the company announced a dividend of AUD 1.10780, to be paid on 16 Sep 2019, with EX date and record date being 5 Sep 2019 and 6 Sep 2019 respectively, the dividend is 45% franked.


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