A Glimpse at Two Consumer Discretionary Dividend Stars – SUL, FLT

Dividends are the earnings of the Group that are passed on to the shareholders. Investors often track stocks with sustained dividend growth as it depicts business strength of the company. The dividends foster the goodwill among the Group’s shareholders as investors see the dividend paying ability of the Group as its strong management position.

Given the low interest rate regime, dividend stocks on ASX are garnering immense investor traction.

Several ASX-listed firms follow a practice of paying dividends out of their profits. Let us have a look at two of them associated with the consumer discretionary sector:

Super Retail Group Limited

Super Retail Group Limited (ASX: SUL) is among Australia’s top ten retailers and has grown into a leader in retailing of sport, auto and outdoor leisure products in New Zealand and Australia. The network of the Group extends to more than 650 retail stores and over 12k team members across New Zealand, Australia and China. Headquartered in Brisbane, the Group houses some iconic brands like Supercheap Auto, Macpac, Boating Camping Fishing and Rebel.

Dividend Announcement: Recently, the Group declared an ordinary fully paid dividend of 21.5 cents related to a period of six months. The dividend was to be payable on 28^th March 2019 and carried an ex-date and record date of 22^nd and 25^th February 2019, respectively. The Group informed that the dividend would be 100 per cent franked with a corporate tax of 30% applicable on it for franking credit.

The Group also had a Dividend Reinvestment Plan (DRP) as an alternative to cash payment. The DRP plan was pertinent at a DRP price of AUD 7.57. The Group informed that the directors have determined in accordance with the DRP plan rules that participation would not be open to a holder whose registered address is in a country other than Australia and New Zealand.

The Group mentioned in its annual report that it intends to maintain a dividend payout ratio between 55 and 65 per cent of underlying net profit after tax. The Group also highlighted in the report that it might adjust the dividend paid to shareholders in order to maintain its capital structure. The annual dividend yield of the Group currently stands at 5.15 per cent (as on 22^nd July 2019, 12:16 PM AEST).

Financial Performance: On 14^th February 2019, the Group announced its financial results for the 26 weeks to 29^th December 2018. The Group reported a net profit after tax attributable to owners of $71.7 million during the period that was 0.7 per cent below the prior comparative period (pcp). However, the Group’s Segment EBITDA improved 9.6 per cent on pcp to $124.5 million.

Stock Performance: SUL’s stock is currently trading at AUD 9.360 with a dip of 1.68 per cent relative to the last closed price of AUD 9.520 (12:17 pm AEST, 23 July 2019). The market capitalisation of SUL is noted as ~AUD 1.88 billion at the time of writing the report. The stock has delivered a return of 39.39 per cent on a YTD basis and a return of 137.75 per cent in the last ten years.

Flight Centre Travel Group Limited

One of the largest travel agency groups across the world, Flight Centre Travel Group Limited (ASX: FLT) has Group-owned operations in 23 countries. The corporate travel management network of the Group is extended over to more than 90 countries. Listed in 1995 on the ASX, the Group’s business consists of more than 40 brands.

Dividend Announcement: The Group recently declared an ordinary fully paid dividend of 60.0 cents per share payable on 12 April 2019. The dividend’s ex-date and record date were 21^st and 22^nd March 2019 respectively. The dividend amount represented a 71.1 per cent return of after-tax profit to shareholders, which was 59.8 per cent of the underlying NPAT value. The declared dividend was in line with the FLT’s policy of returning 50 to 60 per cent of after-tax profit, contingent upon the business’s needs. The dividend was fully franked with a corporate tax of 30% applicable on it for franking credit and was related to a period of six months.

Besides this, the company also announced an additional fully franked special dividend of $1.49 per share payable on 12^th April 2019 to shareholders that got registered on 22^nd March 2019. Both the dividend payments underlined the Group’s success in diversification and globalisation of its business. The annual dividend yield of the Group currently stands at 3.88 per cent (12:17 pm AEST, 23 July 2019).

Financial Performance: The Group released its 1H FY19 financial results in February 2019 that highlighted an improvement in the sales and profit growth of the company. The Group surpassed its 7 per cent compounding growth target through to the end of the financial year 2022 with its total transaction value increasing by 10 per cent to a record $11.16 billion during the period. The underlying profit before tax (PBT) also improved modestly to $140.4million and was in the targeted range of FLT for the period.

Stock Performance: The Group’s stock is currently trading higher on ASX today at AUD 44.890, up by 2.12 per cent (12:17 pm AEST, 23 July 2019). The 52-week high and low value of the stock was recorded as AUD 68.202 and AUD 37.590, respectively. FLT has delivered a return of 8.57 per cent on a YTD basis while it has generated a negative return of 31.79 per cent in the last one year.

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