Dividend story of three ASX-listed diversified companies - SSM, CEN and WES

  • Apr 04, 2020 AEDT
  • Team Kalkine
Dividend story of three ASX-listed diversified companies - SSM, CEN and WES

It is the dream of every investor to have a portfolio that generates a steady income, even in the time of an economic downturn. In order to attain the same, most of the investors generally look for a dividend portfolio. To recall, a dividend is a share in a Company’s profits which companies distributes to its shareholders, to retain them in the Company at their will.

There are various reasons for an investor to choose dividend-paying companies, including the assurance of regular and steady income from investments. The dividend payout of companies, however, are subject to volatility in the market.

In this article, we will look at three ASX-listed, regular dividend-paying stocks from diversified sectors.

Also Read: How dividends are important for the participants of capital markets?

Service Stream Limited (ASX:SSM)

Service Stream Limited provides services to the infrastructure-based industries primarily in the utilities and telecommunication sector. The Company recently announced that UBS Group AG and its related bodies corporate had become an initial substantial holder in the Company on 27 March 2020 with a voting power of 5.17%. 

SSM declared Increased Interim Dividend

Service Stream Limited has reported decent improvement in its financial performance and outlined the following:

  • During 1H FY20, the Company reported EBITDA from Operations of $58.1 million, on revenue amounting to $497.8 million, with a rise of 50%.
  • The Group reported operating cash flow before interest and tax of $32.8 million for 1H FY20 compared to $26.4 million in the pcp.
  • The Board of Service Stream announced an increased interim dividend amounting to 4.0 cents per share as a result of another reliable cash flow performance. Apart from the recent period (1H FY20), the Company paid an annual dividend of 9.0 cents per share in FY19 with an increment of 20%.
  • During the half-year, Comdain Infrastructure won two long-term contracts, one each with water services company, Queensland Urban Utilities and government-owned Sydney Water (through a JV).
  • On the outlook front, SSM anticipates EBITDA from Operations for 2H FY20 to be in line with the reported numbers of 1H FY20.

The stock of SSM closed the day’s trading session at $1.850 per share on 3 April 2020, indicating a decline of 0.27% against its previous closing price. The market capitalisation of Service Stream stood at $755.88 million, with ~407.48 million outstanding shares. At the same current market price, the annual dividend yield of the Company stood at 5.12%. During the last three months and six months, the stock of SSM has generated returns of -31.30% and -30.26%, respectively.

Contact Energy Limited (ASX:CEN)

Contact Energy Limited is engaged in electricity generation and retailing. Recently, the Company was designated as an essential business by the Government of New Zealand. The Company would support the government in limiting the spread of COVID-19 as it has surged to Level-4 in the country.

The Company closed the first half of the financial year 2020 with the operating free cash flow amounting to $120 million with a fall of 39% as compared to 1H FY19. The fall in operating free cash was because of the combination of lower operating earnings (EBITDAF), which was partially offset by the lower stay in business capital expenditure and interest costs.

To please the shareholders, the Company declared a strong and stable interim dividend of 16 cents per share, which is to be paid on 7 April 2020. Moreover, it paid a dividend of 39 cents per share during the financial year 2019. However, for FY20, it expects to pay the full year dividend of 39 cents per share.

Looking ahead, it anticipates generating reductions in costs and delivering robust returns to shareholders at the same time as it develops its large-scale consented geothermal development at Tauhara.

The stock of CEN closed the day’s trading session at $5.720 per share on 3 April 2020, indicating a decline of 3.051% against its previous closing price. The market capitalisation of Contact Energy stood at $4.24 billion, with ~718.08 million outstanding shares. At the same current market price, the annual dividend yield of the Company stood at 5.98%. During the last three months and six months, the stock of CEN has generated returns of -14.86% and -28.92%, respectively.

Wesfarmers Limited (ASX:WES)

Wesfarmers Limited is in engaged in the retail operation including general merchandise and specialty departments stores etc. The Company recently announced that Simon William English had made a change to holdings in the Company by acquiring 22 fully paid ordinary shares at the consideration of $37.8725 per share.

Dividend Supported by Strong Balance Sheet

  • On the operational front, Wesfarmers wrapped up the acquisition of Kidman Resources Limited (Kidman) and Catch Group Holdings Limited (Catch).
  • These investments provide new growth platforms which would be benefited from the existing capabilities of Group and would support shareholder returns over the long term.
  • For the 1H FY20, the Board of directors of Wesfarmers declared an ordinary interim dividend amounting to $0.75 per share, fully franked. The dividend reflects earnings from continuing operations and dividend policy of the Company. It considers available franking credits, healthy credit metrics, a robust balance sheet, as well as cash flow generation while safeguarding balance sheet capacity to benefit from value-accretive growth prospects.
  • Moreover, during FY19, the Company paid final dividend amounting to 78 cents per share, this brought the full-year ordinary dividend to $1.78 per share. Apart from this, the Company also paid a special dividend of $1.00 per share. Hence, the total dividend for the year stood at $2.78 per share.

The stock of WES closed the day’s trading session at $34.670 per share on 3 April 2020, indicating a decline of 3.399% against its previous closing price. The market capitalisation of Wesfarmers stood at $40.69 billion, with ~1.13 billion outstanding shares. At the same current market price, the annual dividend yield of the Company stood at 4.26%. During the last three months and six months, the stock of WES has generated returns of -13.39% and -8.95%, respectively.


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