Five-Star ASX Dividend Players Amidst Low-Interest Rate Regime

  • Jun 24, 2020 AEST
  • Team Kalkine
Five-Star ASX Dividend Players Amidst Low-Interest Rate Regime

Summary

  • Amid the ongoing uncertain environment, businesses have rolled out measures to maintain resilient financial position for long-term growth.
  • In wake of market uncertainty and falling interest rate, high dividend yield stocks that have consistently paid dividends in the past are considered attractive.
  • High dividend yield stocks like Scentre Group and oOh!media have raised funds and introduced measures to strengthen their financial position and ability to continue to deliver returns to securityholders.
  • ANZ is selling its asset finance business in New Zealand, providing 10bps of Level 2 Group CET1 capital.

Current uncertainty across the globe has led to lot of volatility in equity markets, with several companies resorting to capital management initiatives, ensuring they are equipped to manage through the short term volatility whilst remaining in a strong competitive position for the medium and long term.

With interest rates reaching to the lowest levels in Australia, investors are looking for options to park their funds that could give them sustainable returns. Furthermore, if the benchmark cash rate is low, financial institutions and banks provide low rate on deposits, therefore the risk averse investors may consider revisiting their portfolio.

Must Read: Guide to Portfolio Strategies and Investment Avenues to Wade Through COVID-19 Crisis

Companies that have showcased strong dividend yields have been one of the major attractions as an investment opportunity. And, amid the COVID-19 pandemic, such businesses have acted as a saviour for investors who want to play safe. But it is not sufficient to just consider the dividend yield, one should consider business fundaments and other aspects as well.  

In that backdrop, let’s discuss few ASX-listed companies that have good dividend yield- SCG, OML, ANZ and WHC.

Scentre Group (ASX: SCG)

Scentre Group (ASX: SCG) deals with the designing, construction, capital & asset management, and other aspects of shopping centres and retail properties. The company operates under the brand name Westfield in Australia and New Zealand.

SCG Prices Debt Issue -The Company is raising US$1.5 billion (A$2.3 billion) through debt in the United States with the issue of fixed rate senior guaranteed notes. SCG would use the funds raised for paying the existing debt that includes borrowings taken by the Company under revolving bank facilities.

The debt issue includes:

  • US$750 million 5.7-year fixed rate senior guaranteed notes with a coupon of 3.625%
  • US$750 million 10-year fixed rate senior guaranteed notes with a coupon of 4.375%

 

Pandemic Measures - Considering the uncertainty aroused by coronavirus pandemic and market volatility on a global level, Scentre Group has suspended its outlook guidance for 2020. Moreover, the Company has planned not to pay an interim distribution for the first half that ends on 30 June 2020 in order to strengthen its financial position and ability to continue to deliver long-term returns to securityholders.

SCG stock has risen 46.49% in three months and was trading at $ 2.270 on 24 June 2020 (AEST 02:02 PM), moving upward by 0.442% from its previous close. The Company has an annual dividend yield of 10% and paid latest dividend of 11.30 cents on 28 February 2020.  

oOh!media Limited (ASX: OML)

oOh!media Limited (ASX: OML) is a leading media company of Australia, dealing with out-of-home advertising, helping advertisers, leaseholders, various organisations, local bodies and governments to reach the public.

Raised Funds, Curtailed Expenses & Reduced Capex: Due to the pandemic, spend on advertising got affected. Therefore, the Company has resorted to reducing its expenses, negotiated fixed rent expenses with the landlords or property partners and slashed planned capital expenditure, in order to improve the cashflow. Further, the Company has raised funds to the tune of $167 million through equity.

Source: Company's report

OML stock has risen 68.60% in three months and was trading flat at $1.020 on 24 June 2020 (AEST 02:43 PM). The Company has an annual dividend yield of 10.78% and paid latest dividend of 7.5 cents on 3 April 2020.

Good Read: The Changing Scenario for Media Stocks – OML, SVW, SXL

Australia and New Zealand Banking Group Limited (ASX: ANZ)

Australia and New Zealand Banking Group Limited (ASX: ANZ), one of the four biggest banks of Australia, has recently signed an agreement for selling its New Zealand’s asset finance business, UDC Finance to Shinsei Bank Limited for a total consideration of NZ$762 million.

This sale reflects a price-to-book ratio of 1.2x net tangible assets of NZ$637 million at the end of March 2020 and would add about AUD$439 million or approximately 10bps of Level 2 Group CET1 capital at the settlement of the transaction.

For the first half of 2020, the Company reported a 51% decline in statutory profit after tax to $1.55 billion on the prior comparable period, on the back of COVID-19 as the bank registered total collective provision of $4.5 billion to manage the uncertainty. Cash profit for continuing operations declined by 60% to $1.41 billion during the period.

On 24 June 2020 (AEST 03:07 PM), ANZ stock was trading at $18.940, down 0.211% from its previous close. The stock has delivered a return of 34.54% in the last three months. The Company has an annual dividend yield of 8.43% and paid latest dividend of 80 cents in December 2019. The bank has deferred its decision on the 2020 interim dividend and is waiting to get more clarity regarding the economic effects aroused by the pandemic.

Must Read: Banking Stocks under Spotlight – Is there Any Scope of Bounce Back?

Whitehaven Coal Limited (ASX: WHC)

Whitehaven Coal Limited (ASX: WHC) is the leading producer of various types of coal like metallurgical and thermal coal, which the Company sells to power producers, steel companies and other industries. The Company’s stock as per June 2020 Quarterly Rebalance of the S&P/ASX Indices was scheduled to be removed from S&P/ASX 100 Index, effective from 22 June 2020.

March Quarter Production Report - During the March 2020 quarter, there was a 39% increase in the ROM coal production to 2.362Mt; however, there was a 17% fall in the year to date ROM coal production, on the back of shortage of labour and disruptions in production driven by drought and bushfires. Managed coal sales during the three-month period to March declined by 22% to 4.5Mt on pcp and equity coal sales went down by 19% to 3.7 Mt on pcp.

WHC stock has delivered a negative return of 7.51% in three months and was trading downward by 0.195% to $1.537 on 24 June 2020 (AEST 03:21 PM). The Company has an annual dividend yield of 9.42% and paid dividend of 1.5 cents on 6 March 2020.

Good Read: Dividend Yield or Dividend Growth! What is the best way to identify the best dividend stocks?

 


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There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

CLICK HERE FOR YOUR FREE REPORT!
   
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