Dividend stocks amidst unpredictable markets: AGL, SYD, WGB, APA

At a time when most companies have decided to either slash their dividend or withdraw their guidance due to the COVID-19 uncertainty, some have managed to provide a dividend to their shareholders.

The coronavirus has had a detrimental impact on Australia. As on 02 April 2020 at 6:00 AM AEDT, the government has registered 4,976 confirmed cases with 21 reported deaths.

In this article, we would be looking at those companies which have provided their shareholders with a dividend.

AGL Energy Limited (ASX:AGL)

ASX-listed AGL Energy Limited is involved in the energy business and accounts for ~20% of the National Electricity Market’s generation capacity. The Company operates the biggest private electricity generation portfolio in the country, with the total capacity of 10,413 Mega Watts. AGL is also an active contributor in gas & electricity wholesale markets. It has 3.7 million customer accounts which comprise of housing, small & large companies as well as wholesale clients.

1H FY2020 Result Summary:

AGL had a decent 1H FY2020 with double-digit growth in statutory PAT and EPS. Key highlights include:

  • Statutory profit after tax went up by 11% to $323 million as compared to the previous corresponding period (pcp).
  • Statutory earnings per share for the period was 49.7 cents, up 12% compared to pcp.
  • Underlying profit after tax slipped by 20% to $432 million compared to pcp.
  • Underlying earnings per share dropped by 19% to 66.4 cents.
  • Net cash generated from operating activities of the Company was $1,135 million, up 67% compared pcp.
  • Declared an 80% franked interim dividend of 47 cents per share, down 8 cents per share.
  • ROE (rolling 12 months) was 11.2%, a decline of 1.9 percentage points.

FY2020 Guidance:

Notwithstanding the Loy Yang outage, higher depreciation costs & market headwinds, the Company anticipates its underlying profit after tax for FY2020 to be in the upper half of the guidance range of $780 million - $860 million.

On 16 March 2020, the Company provided an update to the dividend and distribution. The reason was the update related to the DRP price, which is $18.22.

Stock Information:

By market closure on 02 April 2020, AGL shares settled at $17.560, in line with the previous close. AGL has a market cap of $11.1 billion and ~632.06 million outstanding shares.

Sydney Airport (ASX:SYD)

Sydney Airport is a Company engaged in Airport operations on 10 March 2020 released an announcement where it reported a significant downfall in traffic performance during February 2020 because of the coronavirus outbreak.

The Company paid a full-year distribution of 39 cents per share. The payment of the final dividend was made on 14 February 2020. The full-year distribution was covered by net operating receipts across the full-year. Because of the uncertainty surrounding the coronavirus and the bushfire, the Company in its FY2019 result announcement clarified that it would provide the distribution guidance as soon as they have more clarity on the situation.

Let’s look at the FY2019 results for the year ended 31 December 2019:

  • During FY2019, the Company reported an increase in the total passengers by 0.1% to $44.4 million as compared to FY2018.
  • Revenue improved by 3.5% to $1,639.7 million. The net operating receipts increased by 5.2% to $905.7 million.
  • Operating expenses declined by 1.6% from 2018 to $205.1 million and EBITDA improved by 4% to $1,336.3 million.
  • Aeronautical revenue increased by 2.4% to $739.3 million, retail revenue by 5% to $374.9 million, and property revenue by $251.2 million. On the other hand, parking and ground transport revenue declined by 0.1% to $162 million.

Recent Update related to COVID-19:

Looking at the recent announcements by the governments (both state and federal) and the responses of competing airlines including Qantas Airways (ASX:QAN), Air New Zealand, and Virgin, the Sydney Airport is working through the precise scheduling impacts on Sydney Airport with its airline partners. The Company expects and is preparing for a considerable but temporary drop in global as well as domestic traffic.

SYD stated that the priority at this point is the health and safety of the people as well as everyone who comes to the airport daily. The Company also assured that it has a solid balance sheet as well as liquidity position. However, still, it would be evaluating its capital expenditure program for 2020. It would be progressing with key projects & postponing less critical projects until they have further clarity regarding the tenacity of the existing travel impacts.

Stock Information:

By market closure on 02 April 2020, SYD shares settled at $5.400, a decline of 6.897% compared to its previous close. SYD has a market cap of $13.11 billion and ~2.26 billion outstanding shares.

WAM Global Limited (ASX:WGB)

WAM Global Limited is an investment management Company with expertise in the Australian and global equity markets. The Company made its ASX debut on 26 June 2018, and since 2019 it has provided a dividend to its shareholders. During 1H FY2020, the Company declared an inaugural dividend of 3 cents per share, up 50% as compared to FY2019. The payment date of the dividend is 28 April 2020. The last election date for the DRP is 20 April 2020.

The Company’s 1H FY2020 results for the half-year ended 31 December 2019 was impressive with WGB reporting a 185.7% growth in its operating profit before tax to $27.2 million driven by sound investment portfolio performance as well as the growth in the assets over the period. The revenue of the Company from the ordinary activities soared 204.8% to $42,876,958.

Stock Information:

By market closure on 02 April 2020, WGB shares settled at $1.755, a decline of 0.847% compared to its previous close. WGB has a market cap of 374.97 million and ~211.85 million outstanding shares.


APA Group is the leading Australian energy infrastructure business that owns as well as operates $21 billion of energy infrastructure assets. Its gas transmission pipelines are around every state & territory on mainland Australia.

The Company made its ASX debut during June 2020 and has past dividend history. In 1H FY2020, the Company declared an interim dividend of 23 cents.

Let’s look at 1H FY2020 Results for the period ended 31 December 2019.

  • EBITDA increased by 6.9% to $842.2 million.
  • Total revenue (without pass-through) soared 6.4% to $1,077.8 million.
  • Net profit after tax went up by 11.2% to $175 million.
  • Operating cash flow rose by 8.9% to $511.9 million.

Operational Highlights:

  • Total capital expenditure during the period was $213.6 million. Out these $145.1 million was growth capital expenses.
  • The full period of earnings from new assets commissioned over the last 18 months. These assets include Yamarna Gas Pipeline, Gruyere Power Station, Darling Downs Solar Farm as well as Badgingarra Wind Farm.

Business Model:

APA’s business model is a low-risk model. They have robust risk management practices in place. The manage counterparty risk by:

  • Diversification of clients as well as industry exposures
  • Evaluation of counterparty soundness
  • Signing long term agreement to help major capital spend.

The Company’s revenue weighted average contract tenor on 1 January 2020 is in surplus of 12 years.

Stock Information:

By market closure on 02 April 2020, APA shares settled at $10.380, a decline of 1.237% compared to its previous close. APA has a market cap of 12.4 billion and ~1.18 billion outstanding shares.

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