- Investors enter the stock markets aiming to generate profit and become financially stable at retirement.
- A Company’s key businesses and their prospects are critical elements that affect an investor’s decision.
- With several companies deferring or lowering the dividend payout due to COVID-19, investors need to have a proper investment strategy and focus on the right stocks.
- Resources behemoth, BHP has consistently provided a dividend to its shareholders and has shown resilience in these volatile times.
- Telstra’s 5G rollout has picked up speed in Melbourne and Tasmania, and the Company has reinforced its balance sheet through a bond issue worth ~A$860 million.
While planning for retirement, the first thing that comes to an individual’s mind is to be financially stable. Individuals invest in the market to generate positive returns and have a regular source of income, like earning periodic dividends.
As a common practice, investors look for big players in the market that have a long history, are financially stable, have operations across the globe, are diversified, and pay regular dividends. However, in the current COVID-19-induced scenario, the only thing that seems certain is uncertainty.
Major players across different sectors have either suspended their respective dividends or have lowered the payout amount. Thus, expecting stocks to generate a regular income might not be simple, and one needs to look at other factors while selecting stocks.
While there have been fluctuations in the performance of several stable businesses, some companies have shown resilience against the challenging market conditions. With proper contingency plans, financial stability to stay afloat in the current times, and the ability to generate revenue even when the demand has stalled, these companies have beaten the odds and performed well.
Against this backdrop, let us take you through two ASX-listed stocks that can be considered suitable for retirement plans.
Disclaimer: Please note that the below stocks is only for the information purpose, and it should not be considered as a recommendation.
BHP Group Limited (ASX:BHP)
BHP Group Limited is a company involved in mineral exploration and production. BHP is a globally recognised Company that extracts and processes minerals, oil, and gases. It has more than 72,000 employees and contractors that are primarily situated in Australia and the Americas. Its products are sold globally.
BHP is a blue-chip company that has consistently provided its shareholders with increased dividends since 2016.
BHP’s Operational Highlights for nine months ended 31 March 2020:
- BHP’s financial position remained strong, supported by its low-cost operations. The business is robust and is expected to generate positive cash flow.
- Sturdy underlying performance was noted throughout the portfolio that counterbalanced the influence of proposed maintenance, natural field deterioration and wet weather in Australia. Group copper equivalent production remained unaffected during the period.
- Record production was achieved at Western Australia Iron Ore and Caval Ridge.
- Production guidance for FY2020 remains unaffected for petroleum, iron ore and metallurgical coal.
- Full-year unit cost guidance remains unchanged for FY2020.
BHP shares have provided a negative YTD return of 6.70%. However, in the last one month, the shares have delivered an impressive return of 21.62%.
On 3 June 2020, BHP shares closed the day’s trade at A$36.340, up by 2.626% compared to its previous close. BHP has a market cap of A$104.31 billion and has ~2.95 billion outstanding shares. The Company has an annual dividend yield of 6.02% and a P/E ratio of 13.340x.
Telstra Corporation Limited (ASX:TLS)
Telstra Corporation Limited is a telecommunication carrier that provides telecommunication and information services which include mobiles, internet and pay television.
The Company has consistently provided its shareholders with dividend since 2016.
1H FY2020 Highlights:
In 1H FY2020 for the period ended 31 December 2019, the Company’s results were in line with the expectation. The Company made its steady progress against its T22 strategy and cost reduction. Noted continued growth in the customer, driven by multi-brand strategy and 5G leadership. The Company declared an interim dividend of 8 cents per share.
5G coverage expansion in Melbourne:
Telstra’s 5G has gained speed with over 600 suburbs throughout the country and has over 50% 5G coverage. In Melbourne, there are over half covered by new mobile technology, and there are places in Melbourne where the latest mobile technology is accessible throughout the whole suburbs.
In 2020, the Company would be focusing on the continuous expansion of 5G coverage so that it could be brought to more regions across Melbourne.
At present, the Company has rolled out coverage to chosen regions in 32 key & local cities and is on the way to provide 5G into the designated region of 35 cities by the mid of 2020.
5G coverage expansion in Tasmania:
In Hobart and Launceston, at present, there are 44 suburbs. The new mobile tech covers more than 50% of these suburbs.
Telstra has rolled out coverage to designated zones across 32 key & regional cities. The Company stays on the path to provide 5G to designated regions of 35 cities by mid of 2020.
TLS shares have provided a negative YTD return of 8.45%. However, in the last one month, the shares have delivered a return of 5.52%.
On 3 June 2020, TLS shares closed the day’s trade at A$3.250, up by 0.932% compared to its previous close. TLS has a market cap of A$38.3 billion and has ~11.89 billion outstanding shares. The Company has an annual dividend yield of 3.11% and a P/E ratio of 18.610x.
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.