In a country like Australia, where the interest rates are kept very low, high yield dividend stocks are one of the most popular investment opportunities available to the investors. Investments in high yield dividend stocks have the potential to provide regular cash streams to investors.
The stocks with higher annual dividend yields are generally termed as ‘High Yield Dividend Stocks. The annual dividend yield is calculated by dividing the annual dividend by the share price of the company. For example, if a company has paid an annual dividend of $20 per share and its current share price is $200, then the annual dividend yield will be 10% (20/200= 0.10).
If a stock has a high dividend yield, the general opinion will be that the stock is attractive as it pays good returns to the shareholders in the form of dividends. However, it is to be noted that each dollar that the company pays as dividends comes at the cost of the company’s growth. This means that, if the company is paying more dividend, it has less money to invest for future growth. Each company needs to follow a balanced approach in paying dividends so that it can please its shareholders while investing for its future growth.
If anyone is evaluating a stock by analysing the dividend yield, he/she must watch out for a sudden increase or decrease, which could affect the dividend yield percentage. Besides that, one must also make sure that the data used for calculating the yield is recent as generally it is calculated on historical data, i.e. interim, final and special dividend paid in the last full year financial year. In case, if any company has paid a dividend for a recent period which could be for a half year or a quarter, that dividend should be included in calculating the annual dividend yield.
Now let’s look at few high yield dividend stocks that are trading on Australian Securities Exchange (ASX).
Westpac Banking Corporation (ASX: WBC)
Australia’s leading bank, Westpac Banking Corporation (ASX: WBC) reported a 24% decline in its statutory net profit for H1 FY19, which amounted to $3,173 million. Further, the bank reported cash earnings $3,296 million and cash earnings per share of 96 cents per share for the half year period.
Despite a challenging half year, the bank ended the period with a strong balance sheet and announced an interim fully franked dividend of 94 cents per ordinary share, representing a payout ratio of 98%. The interim dividend is in line with the previous dividend of recent years, as depicted in the chart below.
Dividend Summary (Source: Company Reports)
Recent Update by WBC: The bank recently received APRA’s (Australian Prudential Regulation Authority) response to its Culture, Governance and Accountability (CGA) self-assessment process, in which APRA pointed out that it has decided to apply further $500 million to Westpac’s operational risk capital requirement.
On the stock performance front, WBC’s stock has provided a return of 8.86% in the last six months as on 12th July 2019. At market close on 17th July 2019, WBC’s shares were trading at a price of $27.680, up by 0.072%, with a market capitalisation of ~$97.79 billion. WBC has an annual dividend yield of 6.8% (calculated on last day close price, i.e. $27.660 as on 16th July 2019). The stock has a 52-week high price of $30.440 and 52-week low price of $23.300, with an average volume of ~7,349,677.
Harvey Norman Holdings Limited (ASX: HVN)
Harvey Norman Holdings Limited (ASX: HVN) reported a net profit after tax of $222.77 million in the first half of FY19, which was 7.3% higher than pcp. The company reported earnings per share of 19.55 cents for 1H19, which was 6.4% higher than pcp.
Half year Results (Source: Company Reports)
Notable financial highlights of the half year period include:
- Net assets soared to $3.15 billion as at 31st December 2018, with the robust tangible, property portfolio of $2.93 billion, representing approx. 93% of the total net asset base;
- Outstanding performance of Harvey Norman® overseas, delivering best-ever trading results for the half year;
- Reported profit before tax up by 7.5% to $315.68 million and record underlying PBT of $297.04 million, up 0.3% from pcp;
- Strongest-ever sales performance overseas, with offshore revenue of $1.074 billion for HY19 and each overseas country reporting solid sales growth and market share gains.
Prompted by the excellent half year performance, the company’s Board declared a fully franked interim dividend of 12.0 cents per share, which was paid on 1st May 2019 to shareholders registered on 5th April 2019. The interim was 5.9% higher as compared to the previous corresponding period amount of $133.70 million.
On the stock performance front, HVN’s stock has provided an excellent return of 29.60% for the last six months as on 12th July 2019. At market close on 17th July 2019, HVN’s shares were trading at a price of $4.240, up by 0.474%, with a market capitalisation on ~$4.91 billion. HVN has an annual dividend yield of 7.11% (calculated on last day close price i.e., $4.220 as on 16th July 2019). The stock is trading near its 52 weeks high price of $4.340. It has a 52 weeks low price of $2.990, with an average volume of ~3,040,996.
Bank of Queensland Ltd (ASX: BOQ)
One of the leading regional banks in Australia, Bank of Queensland Ltd (ASX: BOQ) reported cash earnings after tax of $167 million for the first half of FY19. Further, the bank reported basic earnings per share of 41.8 cents for the half year period, which was 10% lower than pcp. Cash return on equity and net interest margin of the bank also decreased by 110 basis points and 4 basis points, respectively in the 1H FY19 as compared to pcp.
For the half year period, the company announced a dividend of 34 cents per share, breaking the trend of 38 cents per share paid since the past few years, as depicted in the figure below.
Dividend Summary (Source: Company Reports)
In the last financial year, the bank delivered cash earnings after tax of $372 million and statutory net profit after tax of $336 million. The bank paid a total dividend of 76 cents per share for the full year period (refer above figure).
At market close on 17th July 2019, BOQ’s shares were trading at a price of $9.210, down by 0.325%, with a market capitalisation of ~$3.81 billion. BOQ has an annual dividend yield of 7.79% (calculated on last day close price i.e., $9.240 as on 16th July 2019). While calculating this annual dividend yield, ASX has considered the dividend of 34 cents per share paid by BOQ on 22nd May 2019 for the first half of FY19 and the dividend paid in the previous half, i.e. 2H FY18.
Sigma Healthcare Ltd (ASX: SIG)
A leading healthcare company, Sigma Healthcare Ltd (ASX: SIG) reported revenue of $3.97 billion in FY19, which was 2.9% lower than pcp. Further, the company reported underlying EBITDA of $89.7 million, which was down by 9.7% on pcp. The company also reported an underlying NPAT of $46.3 million, down by 13.7% on pcp.
From the past three years, the company has been implementing a program to upgrade its network of Distribution Centres (DC) across the country. This investment has seen the successful opening of facilities at Berrinba in Queensland and Canning Vale in Western Australia. This program will continue in this year, with construction activity well advanced on its new DC at Kemps Creek in New South Wales and Pooraka in South Australia.
The company has a long history of paying a high percentage of profits as a dividend, and FY19 was no exception. The company has rewarded its shareholders with a final dividend of 2.0 cents per share, bringing the total dividend for the year to 3.5 cents per share, which represents a payout ratio of 80.1% of underlying NPAT.
On the stock performance front, the company’s stock has provided a return of 4.27% for the last six months. At market close on 17th July 2019, SIG’s shares were trading at a price of $0.600, down by 1.639%, with a market capitalisation of ~$646.26 million. SIG has an annual dividend yield of 5.74% (calculated on last day close price i.e., $0.610 as on 16 July 2019). The stock is currently trading near to its 52 weeks high price of $0.657.
GUD Holdings Limited (ASX: GUD)
In the first half of FY19, GUD Holdings Limited (ASX: GUD) reported revenues from continuing operations of $220 million, up 13% on pcp. The company reported underlying EBIT from continuing operations of $43.9 million, up 10% on pcp.
Further, the company declared an interim dividend of 25 cents per share for the half year period, up 4% on pcp.
On the stock performance front, the company’s stock has provided a negative return of 9.81% in the last six months. At market close on 17th July 2019, GUD’s shares were trading at a price of $10.110, down by 2.224%, with a market capitalisation of ~$914.16 million. GUD has an annual dividend yield of 5.13% (calculated on last day close price i.e., $10.340 as on 16 July 2019).
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
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.