3 Dividend Stocks for Retirement and Better Future: RFF, WAM, ANZ

  • Jan 24, 2020 AEDT
  • Team Kalkine
3 Dividend Stocks for Retirement and Better Future: RFF, WAM, ANZ

The investors should go for dividend stocks to earn regular stream of income. The dividends in Australia are either franked or unfranked. The companies pay franked dividends from earnings that have been taxed at the full Australian corporate tax rate. However, the companies pay unfranked dividends on the earnings for which non-Australian corporate tax are already paid or from the earnings that are tax exempt earnings. Dividends franked between 0 and 100 per cent are generally the combination of franked and unfranked dividends.

Moreover, the stocks that have decent dividend yield are considered good for investing, though it depends upon the prevailing interest rate and prevailing market conditions. Generally, it is experienced that if the interest rate is rising then the high yield dividend stock will underperform. The stocks having dividend yield of 4 to 6 percent are considered good for investment as they are expected to offer more income to the investors.

Following three stocks: Rural Funds Group, WAM Capital Limited & Australia and New Zealand Banking Group have good dividend yields and can be invested for retirement and better future.

Rural Funds Group (ASX: RFF)

Disposition & Investment:

Rural Funds Group (ASX: RFF) is into the business of leasing of agricultural properties like almond orchards, macadamia orchards, poultry property etc. and equipment that has huge experience of managing funds.

The company has recently completed the sale of its 17 poultry farms to ProTen Investment Management Pty Ltd as trustee for ProTenInvestment Trust (ProTen) for $72.0m. The company had eleven poultry farms, containing old infrastructure and grower agreements, including the leases that were expiring in FY24. The renewal of those contracts would have needed construction of new infrastructure, and therefore required significant investment by RFF.

As a result, the company opted for the sale of these assets instead of redevelopment on them. The funds released from this sale will be used for the payment of debts & for the investment in the natural resource on the assets that have potential for higher total returns.

The first of these is anticipated to be on acquiring three Western Australian (WA) cattle properties. The company has already signed the agreement to purchase 3 cattle properties namely; Petro, High Hill and Willara, for the amount of $22.6 million. This will be inclusive of projected transaction costs. The leases will be made mostly on the same terms as existing cattle property leases, that also includes a 10-year term and the rent terms will be reviewed after every five years. The settlement of this deal is expected to occur by April 2020.

On 24 January 2020, RFF last traded at $1.915, up by 1.323 percent from its previous close. The stock has risen 4.71% in the past three months, as on January 23rd, 2020 and has an annual dividend yield of 5.62%. Further, the company will pay a dividend of 2.712 cents on 31 January 2020, for the period closed 31 December last year.

WAM Capital Limited (ASX: WAM)

Outperformed the S&P/ASX All Ordinaries Accumulation Index by 1.6% in December 2019:

WAM Capital Limited (ASX: WAM), one of the leading listed investment companies (LICs) is operated by Wilson Asset Management. The company has performed strongly since inception in August 1999 and gave an average return per annum of 16.7% from its portfolio before fees, expenses and taxes. WAM has gross assets of $1,366.3 million, profit reserve of 13 cents per share and has posted net tangible assets before tax of $187.10 cents.

The company in the December 2019 has outperformed the S&P/ASX All Ordinaries Accumulation Index by 1.6% before fees, taxes and expenses as WAM Capital investment portfolio gave the negative return of 0.3% in the month of December 2019. The company in December has the three largest holding in Consumer Discretionary of 20% than it holds in Financials of 19.2% & industrials of 12.5%. Moreover, for the first half of 2020, the company is positive for equity market as it is anticipated that global monetary authorities will continue to expand their balance sheets.

Performance at 31 December 2019 (Source: Company’s Report)

On 24 January 2020, WAM last traded at $2.300, up by 0.877 percent from its previous close. As a result, WAM stock has risen 3.64% in three months, as on 23 January 2020 and has an annual dividend yield of 6.8%. Moreover, the company paid a dividend of 7.75 cents on 25 October 2019 for the period closed 30 June last year.

Australia and New Zealand Banking Group (ASX: ANZ)

Antonia Watson appointed as CEO of the company

Australia and New Zealand Banking Group (ASX: ANZ) is among the top four banks in Australia and the largest bank in New Zealand. The company has recently issued US$1,250,000,000 fixed rate subordinated notes, which will be due on July 2030 according to its US$25,000,000,000 Medium-Term Notes Program. These Subordinated Notes are converted into fully paid ordinary shares of the Issuer and the Australian Prudential Regulation Authority determines when this will be necessary on the back of the grounds that the Issuer would not become non-viable.

On the other hand, the bank in December last month, hired Antonia Watson as the company’s CEO or Chief Executive Officer of ANZ. Further, the company will shortly start the procedure to recruit a new MD or Managing Director, Retail and Business Banking.

On 24 January 2020, ANZ last traded at $25.900, up by 0.583 percent from its previous close. Meanwhile ANZ stock has given a negative return of 7.67% in three months as on January 23rd, 2020 and has an annual dividend yield of 6.21%. Also, the company has recently paid dividend of 80 cents on 18 December 2019, for the period closed 30 September last year.


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