Some Good Dividend-Paying Stocks To Secure Your Retirement

The rising cost of living and the rapid transition of super funds from accumulation phase to draw down phase is indicating high importance for retirement planning. Building a retirement income strategy begins with a realistic approach as to how you want your retirement to look like- the longevity, the lifestyle, the cost of maintaining that standard of living, basic requirements and the financial responsibilities.

Those are critical questions as Australians are getting older and it is projected that the number of people aged 65 and above in Australia would increase to almost double in the coming years. Aging Australia, therefore, needs to smartly plan their retirement instead of relying on the Government’s fancy retirement income framework that are often considered as another name of problem.

There is no one-size-fit-all retirement and so, retirees certainly should consider their preferences and risk appetite while investing through the diversified set of assets in their retirement portfolio. Investment in good dividend-paying stocks could be one of the best alternatives to insure a fixed income at the time of retirement.

Dividend is a form of income in the hand of shareholders and a distribution of a reward on the company’s end stemming from its profit. A company may pay dividend yearly, half-yearly, quarterly or even monthly.

ASX-listed stocks that have a decent history and have a potential to generate good dividend returns on consistent basis, can be referred as dividend stocks. The best-paying dividend stocks can yield a steady income to live a carefree retirement life with some modicum of lifestyle and comfort.

Let’s have a lens over some good divined-paying stocks:

Westpac Banking Corporation (ASX: WBC)

Company Profile: One of the big four banks worth $100.51 billion certainly needs no introduction! Westpac Banking Corporation is a financial sector banking company that got officially listed on Australian stock exchange in 1970. Over the years, the stock has earned investors’ trust for paying consistent and high returns in the face of dividends.

Dividend Performance: Its dividend history looks like the following:

Dividend History of WBC (Source: ASX)

In the first half of 2019, Westpac maintained the interim dividend steady at 94 cents per share despite reporting lower profit due to challenging market conditions in the financial services industry. This fully franked interim dividend amount represents cash earnings pay-out ratio of 98% and a dividend yield of 7.3%.

The Board also determined to issue shares to satisfy the dividend reinvestment plan (DRP) for the interim 2019 dividend and to apply a 1.5% discount to the market price used to determine the number of shares issued under the DRP.

Currently, Westpac is reportedly in the process of restructuring its wealth operations, implementing the Royal Commission and CGA self-assessment recommendations, and thereby strengthening the Group’s culture, governance and accountability on overall front.

Stock Performance- Westpac’s stock price edged up by 0.035% to trade at $28.810 on 2 August 2019 (3: 03 PM AEST). The stock is trading at a price to earnings multiple of 13.970x with 3.49 billion shares outstanding on market.

Over the past six months, the stock has gained 17.65% including a positive price change of 1.52% in the past one month.

Tabcorp Holdings Limited (ASX: TAH)

Company Profile: Tabcorp Holdings Limited is an ASX-listed gambling and entertainment industry major that has a market capitalisation of $9.03 billion as at 2 August 2019. Publicly listed in 1994 on the Australian Securities Exchange (ASX), Tabcorp operates through its three core segments that include Lotteries & Keno, Wagering & Media, and Gaming Services.

Dividend Performance: For 1HFY19, Tabcorp announced a distribution of, fully franked, interim dividend of 11.0 cents per share. TAH’s targets 100% of dividend pay-out ratio on NPAT for full fiscal year 2019.

Dividend History of TAH (Source: ASX)

Listed under consumer discretionary sector, Tabcorp delivered $24 million EBITDA synergies in 1HFY19 on its integration with Tatt Group. The company further aims to achieve $55 million of EBITDA from synergies and business improvement in Fiscal 2019, up from the previous target of $50 million. Its overall target for Fiscal 2021 is the range between $130 million and $145 million.

The key highlights of Tabcorp’s Statutory results for 1H19 include:

• Revenues $2,787.4 million, up 108.3%
• NPAT $182.5 million, up from $24.6m in pcp
• EPS 9.1 cents per share, up from 2.6 cents per share in pcp
• Standout performance of Lotteries segment driven by digital growth and game innovation, including bigger and more frequent Powerball jackpots. This led to $1,292.8 million revenue, up 19.6% in 1H19.
• Lotteries digital turnover up 63.5% vs pcp; now 21.5% of total turnover o Wagering digital turnover up 11.6% vs pcp; TAB up 15.3%
• Gaming Services progressing well on venue sign-ups and long-term TGS contract extensions with one-third of the Victorian network now contracted beyond 2022.
• Interim dividend 11.0 cents per share, fully franked

Stock Performance: TAH stock price declined 1.342% to trade at $4.410 on 2 August 2019 (3:41 PM AEST). Tabcorp’s shares are trading at a price to earnings multiple of 53.210x, including total 2.02 billion outstanding shares on market.

Over the past 12 months, the stock has declined by 3.25% including a negative price change of 6.68% over the past three months.

Dicker Data Limited (ASX: DDR)

Company Profile: Dicker Data Limited is an information technology company founded by Sydney-born IT tycoon David Dicker who is, currently, busy making the world’s fastest car in New Zealand.

Dicker Data Limited was founded in 1978, which has now become a leading computer technology and hardware distributor of Australia. Its vendors include Microsoft, Lenovo, Samsung, and Hewlett-Packard, among other major brands.

Dividend Performance: For the quarter ended 31 March 2019, Dicker Data announced 5 cents interim dividend. This follows the 7 cents final dividend paid in March 2019 for the period ended 31 December 2018.

For the March 2019 quarter, Dicker Data reported 21.1% growth in revenue to $386.9 million compared to the previous corresponding period. Profit before tax finalised at $13.5m, tracking ahead of our forecast for the quarter, and 46.7% higher than comparative quarter last year.

Based on Q1 results tracking ahead of the forecast, Dicker Data believes that its FY2019 pre-tax profit guidance of $51.4 million will be achieved.

Dividend History of DDR (Source: ASX)

Stock Performance: The company got listed on Australian Securities Exchange in 2011 and has achieved record trading results since then. This translates a growth of 2995.24% in the stock price since the listing of DDR securities on ASX.

Over the past 12 months, the stock has gained 117.39% including a positive price change of 53.66% recorded over the past three months.

DDR stock price declined by 4.462% to last trade at $6.210 on 2 August 2019. The stock closed at a price to earnings multiple of 32.150x with a market capitalisation of $1.05 billion and outstanding shares of 161.42 million on market.

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