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Coronavirus pandemic has been wreaking havoc in every segment of life, entailing human deaths, infecting people across the world, creating turbulence in financial markets, resulting in businesses postponing their dividends and withdrawing or limiting their guidance for the remaining portion of year.
S&P/ASX 200 index has fallen more than 24 percent on YTD basis, with the index slipping from 6,435.682 noted on 3 March to ~5,067.483 as on 3 April 2020. This bear market has undervalued some stocks, which can be an advantage for small investors to enter and invest at a discount price. Investors would be able to buy these stocks at a fractional cost compared to the time before coronavirus induced crisis. Therefore, the unpredictable market can be used as an opportunity by some investors.
Considering the importance of dividend stocks having the capacity to fetch a long term returns in the form of passive income, in this article we would be discussing three dividend stocks that are currently trading at attractive price.
Stocks under the radar are BHP, AGL, TCL:
BHP Group Limited (ASX: BHP)
Beginning its journey since 1851, BHP Group Limited is a metals and mining company, which is a result of merger amid Billiton and BHP. The Group has been leading the world in the resources space. BHP Group is into extraction and minerals processing, along with oil and gas that are sold across the world.
The Company had witnessed a decline of nearly 22 percent in YTD return, from trading price of 38.95 (2 January 2020) to 30.33 (as on 3 April 2020). There is a huge downturn in price as compared to 52-week high price of 42.330.
Looking at its dividend history, it can be said that since 2016, the year on year annual dividend has increased. In 2016, the annual dividend was 0.4, which uplifted to 3.33 in 2019. Also, BHP’s annual dividend yield was noted at 7.03% with a price to earnings ratio of 11.43x (as on 6 April 2020).
If you look at BHP’s performance from financial and operational standpoint, it had delivered a strong earnings growth in its first half year FY 2020 results for the period ended 31 December 2019. Key highlights as follows:
- Declared fully franked dividend of 65 cents per share.
- Total revenue stood at USD 22.3 billion, an upsurge of 3 percent on prior corresponding year.
- Increased profitability was determined by 15 percent growth in Underlying EBITDA, from USD 10.5 billion to USD 12.1 billion.
- Return on Capital Employed stood at 19 percent and Underlying EBITDA margin was at 56 percent.
- Net debt was USD 12.8 billion and free cash flow was noted at USD 3.7 billion.
- Production volumes were stable and were in accordance with its full year guidance.
- BHP’s major projects include its first production at AP3 and SGO in the coming 12 months period.
On 6 April 2020, BHP was trading at $31.35, moving up by 3.363 percent (at AEST 2:56 PM).
AGL Energy Limited (ASX: AGL)
Operational since more than 180 years, AGL Energy Limited manages the biggest Austrlaian private electricity generation portfolio. AGL has a broad customer base of 36,000, with the acquisition of southern phone, the total number added in mobile/ broadband, were 160,000.
AGL holds a resilient and diverse portfolio as indicated from the increase of generation of 3%, despite an outage from Loy Yang.
The annual dividend ranges from 0.68 (in 2016) to 1.19 (in 2019). On 6 April 2020, AGL’s annual dividend yield was noted at 6.35 percent with price to earnings ratio at 12.19x. The Company declared interim dividend of 47 cents per share.
The stock price for 52-week high was recorded at 23.21, the Company has given a negative return of 15.01 % on YTD basis.
As of now, the Company is positive about its guidance and delivered a decent first half FY 2020 results for the period ended 31 December 2019.
The snippet of the Company’s performance is mentioned below.
- ROE was 11.2 percent as compared to 13.1 percent in 1H19, a decrease of 1.9 percentage
- Statutory earnings per share were 49.7 cents, an upsurge of 12.4 percent as compared to pcp. However, Underlying earnings per share were 66.4 cents, a decrease of ~19 percent on pcp basis.
- Statutory profit after tax increased by 11 percent on pcp basis, from $290 million to $323 million. However, Underlying profit after tax depleted by 20 percent on pcp basis, to $432 million.
- Net cash from operating activities was $1,135 million, an increase of 67 percent on pcp basis.
Update on FY 2020 Guidance: Subject to the normal trading conditions, the underlying profit after tax is being anticipated in the range of $780 million to $860 million.
On 6 April 2020, AGL was trading at $17.685, rising up by 1.115 percent (at AEST 3:36 PM).
Transurban Group (ASX: TCL)
ASX-listed company, Transurban Group is a toll road operator which builds toll roads in Australia, Canada and the United States. The Company has more than 20 years of experience and has been included in the top 15 listed companies. TCL has 8.6 million customers and provides nearly 9,000 construction jobs. Also, Hills is 100 percent owned by Transurban.
The price of TCL dipped from $14.9 (on 2 January 2020) to $11.1 (on 3 April 2020). The Company recorded 52-week high and low price at $16.44 and $9.1. Its annual dividend yield was recorded at 5.5 percent with price to earnings ratio of 137.04x on 6 April 2020.
TCL’s recent activities: Recently, the Company declared that Fitch Ratings reiterated ‘A’- ratings for AMT Management Limited and Transurban Finance Company Pty Limited.
Also, the Company confirmed that the Hills M2 Motorway has arrived at the close of its raising of $815 million of non-recourse debt funded in the Asian loan market.
Additionally, Transurban had recently on 2 April this year updated on issuance of senior secured notes as significant steps for balancing the Company’s financial growth. The financing vehicle of the Company, Transurban Finance Company Pty Limited had priced EUR 600 million of senior secured notes for 10 year under its Euro Medium Term Note Programme.
While on 25 March 2020, TCL notified that its subsidiary company Hills M2 coming to the contractual end to raise around $815 mn of non-recourse debt amount through 2 debt facilities funded in the Asian loan market. The raised funds are expected to improve the Company’s weighted average maturity which was 8.4 years in December 2019.
On 6 April 2020, TCL last traded at $11.290, rising up by 1.712% from its last close.
