What do you need to know about these Income Stocks: EHE, QBE, RHC?

What do you need to know about these Income Stocks: EHE, QBE, RHC?

Summary

  • Income stocks are an attractive option for individuals looking for a regular flow of income, primarily retired people.
  • Estia Health Limited provided an operational and financial update and confirmed that none of the residents tested positive for COVID-19. However, there were three COVID-19 cases within its workforce of ~7,500 employees.
  • QBE Insurance Group provided an update on business interruption claims. QBE recorded that reinsurance might restrict the Group’s net UK business disruption claims amount to $75 million.
  • Ramsay Health Care completed SPP and raised $300 million. The Company signed deals with NHS England and the State of Western Australia.

The COVID-19 pandemic has not only brought drastic changes in the life of an individual, but the impact could be seen on the businesses as well. No one would have wondered that the current situation, which arose four months ago, would lead to a scenario where companies that were doing well are struggling to keep themselves afloat.

The coronavirus outbreak also changed the perception of market players regarding various income stocks. Many income stocks which provided a dividend to their shareholders have cancelled, deferred, or reduced their dividend payouts. This has led to unrest among market participants, especially people who are retired or on the verge of retirement and were counting on such a regular flow of income.

Do Read: When Banks’ Dividends Are Under the Knife, Are Players Like Telstra Emerging as Winner?

Even though in the present scenario, many income stocks have been impacted, most of the conservative investors continue to look for income stocks as they are a source of regular and continuous income and they have a comparatively low level of risk.

Also Read: Is it a Carnage? Dividend Dynasty for Income Stocks and a Peek into Present Dividend Stalwarts

In this article, we would walk you through three ASX-listed income stocks and see their latest updates.

Estia Health Limited (ASX:EHE)

Estia Health offers aged-care services across the states of Victoria, NSW, Queensland, and South Australia.

The Company has provided an update on the crucial operational and financial matters. EHE had earlier announced the Company’s decision to withdraw its guidance for FY2020 and the current uncertainty due to the coronavirus outbreak.

COVID-19:

A Board sub-committee was established in March 2020 to supervise the COVID-19 response of the Company. This was assisted by a dedicated Critical Incident Management Team which worked with 69 homes of the Company to ensure alignment of EHE’s response with the Australian Health Protection Principal Committee.

The Company ensured that none of its residents was tested positive. However, there were three COVID-19 cases within its workforce of ~7,500 staff during March and April.

The Company highlighted that its focus remained on keeping its employees and residents safe, and it continues to obtain additional supply sources & retain increased stock levels of Personal Protective Equipment.

The ongoing impacts of the pandemic & related Government response have and can be projected to remain to influence the Company.

Occupancy:

Occupancy in mature homes, during the early stages of the COVID-19 lockdown in Australia, declined from 93.8% on 17 March to 91.7% on 26 April 2020. This represents a drop of 125 residents.

Net Bank Debt:

The Company has net bank debt of $330 million. Of this debt facility, net bank debt, on 22 May 2020, was $108.5 million, up by $11.9 million since 31 December 2020.

Operational Costs:

The Company anticipates a growth in the staff costs, Personal Protective Equipment and other medical supply costs related to the management & response to COVID-19.

Stock Information:

EHE shares closed the day’s trade at $1.570 on 26 May 2020, an increase of 5.017% compared to the previous close. The Company has a market cap of $390.6 million and has ~261.27 million shares outstanding.

QBE Insurance Group Limited (ASX:QBE)

QBE Insurance Group Limited is a Sydney, Australia-headquartered insurance player offering risk management services, and commercial and personal products.

While the business interruption policies of the Group doesn’t typically include claims occurring from COVID-19, in response to questions concerning potential business disruption claims about QBE’s UK based policyholders, QBE recorded that reinsurance might limit the Group’s net UK business interruption claims cost to $75 million.

The Company also highlighted that many businesses in the present situation are facing an extremely difficult time, and they are working closely with broker partners and the agents to assist the clients during this uncertain time.

Stock Information:

QBE shares closed the day’s trade at $8.190 on 26 May 2020, an increase of 0.122% compared to the previous close. The Company has a market cap of $12.02 billion and has ~1.47 billion shares outstanding.

Ramsay Health Care Limited (ASX:RHC)

Ramsay Health Care offers private healthcare services across geographies, including Australia, the UK, France, Malaysia, and Indonesia.

On 25 May 2020, RHC announced the successful completion of its share purchase plan that was announced by the Company on 29 April 2020. Under the share purchase plan, the Company raised $300 million and expected to issue 5.37 million new fully paid ordinary shares.

The SPP was open to 80,273 qualified stockholders. The Company received valid applications totalling $695 million obtained from 41,877 shareholders. The numbers show that the participation rate of the qualified stockholders was only 52% at a record date of 21 April 2020. The average application amount was $16,596. The SPP Shares would be provided to successful Share Purchase Plan candidates at $56.00 per share.

The eligible shareholders are allotted several SPP stocks equivalent to ~32% of the number of stocks held on the Record Date subjected to:

  • A minimum allotment of 10 SPP Shares.
  • A maximum allotment of 535 SPP shares.
  • In case a candidate applied for less SPP Shares than their Pro Rata Amount, then they have gotten an allotment of SPP Shares equivalent to the SPP Stocks for which they requested.

Recent Agreements with NHS England and State of Western Australia:

NHS England:

On 18 May 2020, Ramsay Health Care entered into an agreement with NHS England under which RHC would make its facilities available to the NHS & its patients amid COVID-19 pandemic.

The duration of the comprehensive contract is for at least 14 weeks from 23 March 2020 and post that on a revolving basis and could be ended by NHS England by providing a notice of 1 month.

Western Australian Agreement:

On 18 May 2020, the Company update that it finalised a deal with the State of Western Australia to make its facilities & services open amid COVID19 pandemic.

The agreement with the State of Western Australia started on 31 March 2020 and would conclude on the date informed by the State of Western Australia by providing 30 days’ notice. Further, the notice would not be provided before 31 August 2020.

Stock Information:

RHC shares closed the day’s trade at $70.660 on 26 May 2020, an increase of 2.406% compared to the previous close. The Company has a market cap of $15.42 billion and has ~223.51 million shares outstanding.

 

NOTE: $ denotes Australian Dollar, unless stated otherwise.

 


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