Dividend-Responsive ASX Retail Stocks You Should Not Miss

Dividend-Responsive ASX Retail Stocks You Should Not Miss

Australian stock market experts opine that if an investor is hunting down dividend stocks that has good history and an even robust outlook in the dynamic business environment of modern trade, the best options are to tap companies that are mature and dominant in their field.

The retail sector has been known to provide investors with ample opportunities to generate wealth across diverse economic cycles. However, unlike most other sectors, the economically sensitive retail sector demands constant vigilance about changing economic conditions.

In Australia, the retail sector is transforming rapidly at the back of disruptive forces- changing consumer spending patterns, increase in online retail and the invasion of foreign companies.

In today’s article, we have cherry-picked 5 retail sector stocks, listed on the ASX, that have been doing the rounds for being promising dividend payers to their stakeholders-

Super Retail Group Limited (ASX:SUL)- Dividend Policy to Pay 55- 65% of underlying NPAT

One of Australasia’s top 10 retailers, SUL has grown since 1970 to lead retailing of auto, sport and outdoor leisure products in Australia and New Zealand. The Company has three primary value levers- grow annual customer value, be an efficient omni-retailer and focus on organic growth and capital discipline.

SUL’s core principle is to ensure that the dividend payouts are maintained within the policy of 55% to 65% of underlying NPAT, fully franked where possible. The Company’s earnings growth and strong cash flow generation thrives to enable the Group to comply with this principle.

In FY19, SUL’s solid financial performance and prudent capital management supported the Board’s decision to declare a final dividend of 28.5 cents fully franked. This brought the full year dividends to 50 cps fully franked, up by 2% on the prior year, while maintaining the dividend payout ratio.

Amid recent trade wars, RBA interest rate cuts, retail consumer sentiment and the health of the Australian economy, SUL has grown its dividends per share from 13 cents to 50 cents, representing a compound annual growth rate of 11% (in the past decade). Interestingly, the Group has delivered total shareholder returns in excess of both the S&P/ASX 200 Index and the SP/ASX 200 Consumer Discretionary Index in the past decade.

Metcash Limited (ASX:MTS)- Dividend Payout Ratio of ~60% of Underlying EPS

The power behind Australia’s most successful independent retail brands, MTS provides merchandising, operational and marketing support across its pillars- food, liquor and hardware.

For 1H20 ended on 31 October 2019, MTS announced an interim dividend of 6 cps, fully franked (paid on 23 January 2020). The dividend payout ratio was approximately 60% of the underlying earnings per share.

Group CEO, Jeff Adams believes that MTS’ financial position remains strong, providing the Company with the flexibility to fund its current initiatives, as well as consider future growth opportunities that create value for shareholders.

Coca-Cola Amatil Limited (ASX:CCL)- Attractive Dividends Above 80% Payout Ratio

Predominantly a Coca-Cola franchisee with leading brands, CCL is a beverages market leader in ASEAN and Oceania and has a leading portfolio of brands and track record of delivering innovation.

The Company is known to pay attractive dividends above 80% payout ratio. Interestingly, CCL has consistently held or increased dividends since 2014 and return the highest dividend yield of major Coca-Cola bottlers since 2016.

Last year, CCL intimated that its dividends are expected to return to being franked in 2021 with a possibility of the level of franking to be above 50%.

Meanwhile, the total unfranked dividend for 1H19 was 25 cps (interim dividend of 21 cps and special dividend of 4 cps). The Company will be paying the 2019 final dividend on 15 April 2020 after it announces the FY19 results on 20 February 2020.

Wesfarmers Limited (ASX:WES)- Distributed $3.2 billion to shareholders in FY19

A diversified corporation, WES has grown into one of Australia's largest listed companies adhering to home improvement, outdoor living, apparel and general merchandise, office supplies and even has an industrials division.

Chairman Micheal Chaney believes that there is no trade-off between paying dividends and making investments, as good companies do both. Over the past three decades, WES has been one of the most consistent investors in Australia and one of the biggest dividend payers.

In FY19, WES distributed $3.2 billion to shareholders in the form of fully-franked dividends. This amount was a result of the demerger of Coles from Wesfarmers and the divestment of other businesses.

Directors declared a fully-franked final dividend of 78 cps, bringing the full-year ordinary dividend to $1.78 per share. Including the special dividend paid in April 2019 of $1 per share, total fully franked dividends for the year were $2.78 per share.

The Company is due to announce its 2020 half-year results on 19 February 2020.

Coles Group (ASX:COL)- Commits to Pay Dividend Parallel to 80-90% of After-tax Profits

A leading Australian retailer, with more than 2,500 retail outlets nationally, nearly 21 million customers shop with COL each week.

The Company has structured its financial framework in a way that it is able to provide shareholders with sustainable earnings growth and attractive dividends over the long term. The refreshed strategy, to inspiring customers through best-value food and drink solutions, Smarter Selling and Win Together, is expected to aid Coles in maintaining market share in the medium term along with a strong balance sheet and attractive dividends.

In FY19, COL paid a total fully franked dividend of 35.5 cps (24 cps by way of Final Dividend for the second half of the financial year, and 11.5 cents per share as a Special Dividend). This level of dividend was consistent with the Company’s commitment to pay a dividend equivalent to 80 to 90% of after-tax profits.

Moreover, in September 2019, the Company introduced a Dividend Re-investment Plan for shareholders who wished to re-invest part or all of their future dividends in additional Coles shares.

The Company is due to announce its interim results for FY20 (including its second quarter retail sales results) on 18 February 2020.

Stock Performance and Returns

Let us look at the stock performance, 1-year return and annual dividend yields of the discussed companies, as on 17 February 2020-

Company Name

Stock Performance

Annual Dividend Yield

1-Year Return

Super Retail Group Limited (ASX:SUL)

$8.9, 1.44%

5.54%

17.43%

Metcash Limited (ASX:MTS)

$2.75, traded flat

4.73%

8.27%

Coca-Cola Amatil Limited (ASX:CCL)

$11.86, 0.42%

3.95%

38.67%

Wesfarmers Limited (ASX:WES)

$45.45, 0.43%

3.9%

41.18%

Coles Group (ASX:COL)

$16.91, 0.41%

Not Available

37%


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This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice. 

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