6 Stocks on the ASX Dividend Charter: FMG, MGR, RFF, MTS, WAX, BKW

  • May 19, 2020 02:01 PM AEST
  • Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

6 Stocks on the ASX Dividend Charter: FMG, MGR, RFF, MTS, WAX, BKW

Dividends are one of the key concerns of investors and play an important part while investing in a stock of the company. Many companies cut their dividends to shore up capital during tough times like recession or any crisis like coronavirus.

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Companies that pay regular dividends are attractive to investors as they provide a steady source of income and have a substantial amount of cash. Dividends also reduce the overall portfolio risk and losses due to a decline in stock prices. During a volatile atmosphere, investors are on a lookout for stocks that have the ability to give them constant returns.

Let’s have a look at 6 stocks on ASX dividend charter.

Fortescue Metals Group Ltd

Fortescue Metals Group Ltd (ASX:FMG) is an Australian company and fourth-largest iron-ore producer. FMG represented strong operational performance by delivering record shipments and leading in cost position during the March quarter 2020.

Source: FMG’s Macquarie Australia Conference Presentation

FMG has been a core supplier to China, and China’s steel production increased to 235 metric tonnes in CY20. FMG anticipates a strong demand for its products and steady recovery in that market.

Fortescue’s balance sheet remains structured on low cost, investment-grade terms while keeping flexibility for extra repayment and future progress.

  • FMG’s cash on hand, as on 31 March 2020 was noted at US$4.2 billion that included US$1.6 billion, reserved for the FY20 interim dividend/distribution- the payment of the same was made on 6 April this year.
  • The gross debt remained at US$4.0 billion at 31 March 2020
  • Guidance for shipments upgraded to 175 - 177 million tonnes while C1 cost guidance of US$12.75 - US$13.25/wmt
  • Total capital expenditure revised to US$2 - US$2.2 billion (previously US$2.4 billion), showing the timing of expected payments on growth projects

Dividend policy of the firm stays to pay-out a ratio of 50-80% of full-year NPAT. The stock surged by 5.8% to a record high of $13.28 on 18 May as it sold all its iron-ore to China.

Also, on 13 May, Forrest family’s private commercial group notified the market on changing its brand name to Tattarang from its earlier name Minderoo Group. FMG’s Chairman is Dr Forrest AO wherein Tattarang Pty Ltd has 36% shareholding.

FMG was trading at $13.79 on 19 May, up by 3.84% (at AEST 12:13 PM).

Mirvac Group

Mirvac Group (ASX:MGR), real estate investment, development and investment management company, withdrew its earnings and distribution guidance during Q3FY20.

MGR made 58% of its operating EBIT earnings from office and industrial assets. The annual dividend yield of MGR was at 5.34% on 20 April 2020. However, the Group has asserted that MGR is preparing for the recovery, and Q3FY20 metrics do not reflect the full impact of the COVID-19 pandemic. Mirvac has bolstered short-term resilience, development pipeline, exploring opportunities and improving capabilities.

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The Group maintained momentum during January and February while the landscape became more challenging in March due to coronavirus outbreak, causing sales to fall due to a decline in consumer sentiment. MGR is focussed on supporting residential communities through social distancing challenges and isolation with initiatives such as virtual community engagement programs serving residents to stay in touch.

Recently, Mirvac secured a proposal for building a 270-metre residential tower for $1 billion in Sydney. It is also further planning to take advantage of the current environment with plans to roll-out its first build to rent apartments in Sydney.

MGR was trading at $2.205 on 19 May, up by 5% (at AEST 12:25PM).

Rural Funds Group

Rural Funds Group (ASX:RFF) is managed by Rural Funds Management Limited and owns a diversified portfolio of agricultural assets of Australia.

The Company has grown its dividend at 4-7% rate and has recorded a distribution yield of 5.9% for FY21. RFF declared an unfranked dividend of $0.027118 per share for period ending 31 March this year, the payment was made on 30 April.

ALSO READ: Charting-out Earnings Growth for these 3 COVID-19 proof stocks

The distribution of the Company remains safe because agriculture is one of the least affected industries and has contracted rental growth.

RFF was trading at $1.85 on 19 May, down by 0.963% (at AEST 12:45 PM).

Metcash Limited

Metcash Limited (ASX:MTS) is an entity that is a wholesaler to independent retailers in the food, grocery, along with liquor, hardware and automotive space.

MTS announced its plans for capital raising in April and completed $300 million placement to institutional shareholders. It has an ongoing share purchase plan (SPP) of $30 million and is not underwritten.

All shares issued under placement and SPP were entitled to full-year dividend for FY20 and when the Board determines to pay a final dividend in respect of FY20.

As per its trading update-

  • Food sales improved during March and early April due to coronavirus restrictions, but costs offset the benefits of higher sales.
  • Liquor sales growth improved in the first five months to March 2020 of 2H20, but operations were affected in NZ due to coronavirus restrictions
  • Hardware sales declined by 1.3% for the five months to March 2020 in 2H20

The Group expects lower sales for FY21 due to cessation of Drakes South Australia supply contract and no renewal of supply agreement by 7-Eleven.

MTS was trading at $2.48 on 19 May, up by 0.813% (at AEST 12:52 PM).

Brickworks Limited

Brickworks Limited (ASX:BKW) is a building material manufacturer and declared an increased interim dividend of 20 cents per share 100% franked during 1HFY20.

The Company has provided shareholder return of almost 13% pa over 44 years. BKW is 1 of the only 8 companies to maintain or increase dividends every year since the turn of the century.

Source: BWK CEO Presentation, ASX

During 1HFY20 for the period closed 31 January this eyar, BKW recorded revenue of $448.62 million from continuing operations and NPAT of $100.29 million. After closing of its manufacturing operations at its five Pennsylvania brick plants, the company has been advised to restart the plan after consulting the Governor.

The Company is ready to face the challenges arising out of coronavirus through its robust balance sheet and diversified portfolio.

BKW was trading at $13.26 on 19 May, up by 0.683% (at AEST 12:56 PM) .

WAM Research Limited

WAM Research Limited (ASX:WAX) is an entity managed by Wilson Asset Management Group that offers investors a varied portfolio of undervalued growth conglomerates.

WAM Research has gross assets worth $181.6 million with listed equities amounting to $131.7 million. The Company has an annualised fully franked interim dividend yield of 8% and has paid dividends of 109.2 cents since its inception.

Source: April Investment update, ASX

The Company is expected to continue giving dividends as it has the right cash balance, profit and high-quality investment team. WAM outperformed in April, which was driven by natural skin and hair products company BWX whose products are sold in pharmacies and supermarkets, which witnessed strong demand and remained open during coronavirus period.

WAM was trading at $1.33 on 19 May, up 2.308% (at AEST 1:00 PM).

(NOTE: Currency is reported in Australian Dollar unless stated otherwise.)



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