With political and war tensions rising between Iran and US, ongoing trade conflicts between US-China and devastating bushfire in Australia, it can be said that the year 2020 might not have taken a right start. The question rising here for investors is How can they still earn returns in this uncertain environment.
Dividend stocks could be the answer to that question. As interest rates in Australia are already at record low levels, dividend stocks are viewed by some as the most attractive investment opportunity in the current scenario.
We have screened few high dividend yield stocks which have witnessed good operational progress in the recent past.
Alumina Limited (ASX: AWC)
Metal and mining company Alumina Limited (ASX: AWC) most recently paid a dividend of 4.4 US cents per share (cps) for H1 FY19 (six months ending 30 June 2019) which was lower than the dividend of 8.6 US cpc paid during the previous corresponding period (pcp). Despite this, AWC continues to have an impressive annual dividend yield which currently stands at 11.41% as at 7 January 2020.
Alumina Limited is the closest thing in the world to a listed, pure play alumina company. Compared to its industry peers, it is almost fully focused on refining the intermediate alumina product in the aluminium supply chain. The company’s current net debt is around 65 million US dollars and its balance sheet is very strong.
BY AEDT 3: 20 PM, AWC stock was trading at a price of $2.330, up by 1.747% intraday, with a market cap of $6.59 billion.
Southern Cross Media Group Ltd (ASX: SXL)
Australia’s leading media company Southern Cross Media Group Ltd provides Australian sales representation for global open audio platform SoundCloud and operates Australia’s leading premium podcasting network - PodcastOne Australia.
In FY19 (year end 30 June 2019), the company reported revenue of $660.1 million, underlying EBITDA of $159.9 million and underlying net profit after tax of $76.2 million. For the year, the company maintained fully franked dividends of 7.75 cents per share, in line with the prior year.
The company expects EBITDA for the six months ending 31 December 2019 to be in the range of $60 million to $68 million. As a result of decisions to outsource transmission and television playout services, the company expects its FY20 capex to be $5 million to $7 million lower than FY19.
The company currently has an annual dividend yield of 9.17%.
Bank of Queensland Ltd (ASX: BOQ)
One of Australia’s leading banks, Bank of Queensland Ltd recently completed a Share Purchase Plan, announced by BOQ on 25 November 2019 in conjunction with BOQ’s fully underwritten $250 million institutional placement.
In FY19 (year end 30 September 2019), the bank reported Cash earnings of $320 million and statutory net profit after tax of $298 million, representing 14% and 11% respective declines on the previous year, causing the bank to reduce its dividend to 65 cents per share. Despite this, the bank’s annual dividend yield currently stands at 9%, higher than the top four banks of Australia.
BOQ Operation Progress Highlights
- Good progress in its foundational investments with above system growth in the BOQ Specialist, BOQ Finance, and the VMA businesses
- Embedding its purpose and values to deliver more human empathetic experiences that help customers and communities prosper
- Rollout of its new mobile banking app and Apple Pay in BOQ Specialist
- Successful completion of the Virgin Money digital bank pilot and Board approval for the roll out of this growth opportunity in 2020
- Sound underlying asset quality
BOQ currently trades at $7.325 with a market cap of around $43.28 billion.
Whitehaven Coal Ltd (ASX: WHC)
The leading Australian producer of premium-quality coal, Whitehaven Coal Limited recently completed the acquisition of EDF Trading Australia Pty Limited, bringing its ownership interest in the mine to 77.5%.
The company recently updated its FY20 guidance which is as follows:
FY20 Guidance (Source: Company Reports)
Two main challenges that the company currently face are:
- Impacts arising from dust events related to severe and ongoing drought conditions in North West NSW
- Challenges being experienced sourcing skilled operators for Maules Creek, Whitehaven’s largest operation
During the last financial year, the company provided record returns to shareholders with a final dividend of 30 cents taking full year dividends to 50 cents per share. Some other major highlights of last year include:
- TRIFR of 6.16 at 30 June, 11% below the previous year and below the NSW average;
- Record equity ROM coal production of 18.4Mt, up 4% YOY
- Equity sales including purchased coal of 17.6Mt, up 2% YOY
- Record Underlying EBITDA and NPAT before significant items of $1,041.7m and $564.9m respectively
As per ASX, the company currently has an annual dividend yield of 10.73%. The stock is currently trading at $2.585 with a market cap of around $2.490 billion.
New Hope Corporation Ltd (ASX: NHC)
During the last financial year, energy company, New Hope Corporation Ltd, witnessed record profit before non-regular items with a 3% increase on the previous year with Profit Before Tax and non regular items being $384 million. Notably, the full year dividends totalled 17 cents per share fully franked which is up 21% on the previous financial year.
The company intends to continue its focus on creating synergies and integration efficiencies across all sites by leveraging off the individual strengths of each operation and where possible, applying those across other sites.
NHC currently has an annual dividend yield of 8.250. BY AEDT 3:20 PM, NHC stock was trading at a price of $2.080, down by 0.478% intraday, with a market cap of $1.74 billion.
Although dividend yield analysis is one of the most common and simplest methods of identifying good dividend stocks, it should not be the only criterion for selecting a stock as many times, dividend yields are inflated or deflated due to sudden increase or decrease of the share price.
To look at top 25 ASX Stocks by Dividend Yield, Click here.
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There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.
As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.