Are Dividend Stocks Aventus and Bravura Solutions Worth Looking at Amid Volatile Market?

Summary

  • Dividend stocks remain one of the sought-after investments by investors amid the face of COVID-19 crisis.
  • Amid the pandemic period, several dividend-paying sectors have been under pressure; however, many have continued making dividend distributions.
  • Aventus Group paid a dividend of AUD 0.0235 in August 2020 for the quarter ended 30 June 2020, with FY20 distributions of 11.9 cps.
  • Aventus’ FFO up 4.2 per cent, solid rent collection of 87 per cent and high occupancy of 98 per cent maintained for FY20.
  • Bravura declared an unfranked final dividend of 5.5cps, bringing the full-year payout ratio to 67 per cent of FY20 NPAT. Group revenue up 6 per cent, while Group EBITDA grew by 19 per cent.

Dividend stocks are one of the sought-after investments by investors, as they enable them to earn a regular stream of income. Dividend is basically a payout of a portion of the company’s net income to eligible shareholders.

Amid the COVID-19 pandemic, dividend payments have been under pressure; however, few companies have continued to gain market attention for making dividend distributions. At the times of crisis, dividend stocks can be the source of income, as even during recessions, few dividend stocks have been observed to make dividend payments to their investors in the past.

Also Check: List of Top 25 ASX Dividend Stocks with Yield over 5% (13 August, 2020)

In this article, we discuss two dividend stocks in the ASX-listed universe, operating in the information technology and real estate sectors.

Aventus Group (ASX: AVN)

Aventus Group (ASX: AVN), the owner, manager and developer of large format retail centres in Australia, paid a dividend of AUD 0.0235 on fully paid ordinary/units stapled securities on 28 August 2020. The dividend paid was for the quarter ended 30 June 2020.

As of 11 September 2020, the company has an annual dividend yield of 5.08 per cent.

During August 2020, Aventus announced its results for the full year ended 30 June 2020. The company performed well amid the uncertain environment with solid rent collection of 87 per cent through the coronavirus period from 1 March 2020 to 30 June 2020. A high occupancy of 98 per cent maintained, with minimal holdovers of nearly 2 per cent. Furthermore, support of ~AUD 6 million was provided by way of rent relief to affected tenants.

All retailers at AVN centres except Victoria are open and operating, according to the company update dated 24 August 2020. The company reported diversified and substantial tenancy mix, expected to benefit from the recent shift of working, studying and entertaining from home. AVN noted active leasing management with 90 leases negotiated across 80,600m2 of GLA.

Must Read: Real Estate Winners Vs Losers Over the Last Three Months

FY20 Financial Highlights

  • Funds from operations grew by 4.2 per cent year-on-year to AUD 100 million
  • Preserved AUD 121 million in liquidity and no debt expiries until 2022
  • Statutory Profit stood at AUD 57 million
  • Net Tangible Asset per security of AUD 2.14 and Net Asset Value per security of AUD 2.41
  • Distributions of 11.9 cents per security
  • Interest Cover Ratio grew to 5.2x, an improvement from 4.7x in FY19, which is above covenant requirement of 2.0x
  • Weighted-average debt maturity of 3.1 years and weighted average cost of debt decreased to 3.1 per cent.
  • Gearing decreased by 2.7 per cent to 36 per cent, within the self-imposed objective range of 30 per cent - 40 per cent.
  • Successful launch of the Aventus Property Syndicate 1 (APS1) led to the establishment of third-party funds management platform.

Portfolio Valuation of Aventus

For the past three years, the Weighted Average Capitalisation Rate (WACR) of 6.7 per cent has remained stable. In FY20, the independent valuations included 38 per cent of the portfolio by value. The resulting net devaluation of AUD 37.3 million is due to COVID-19 impact, which estimates for 66 per cent of the valuation change.

Aventus portfolio's total valuation increase over the last three years was AUD 181 million, which highlights the resilience of portfolio value, and now it values nearly AUD 2.1 billion.

FY21 Outlook - Amid the uncertain pandemic environment, the company has not provided FY21 guidance. For the near-term, AVN plans to complete Caringbah Super Centre, boost the core portfolio via broadening tenant base, and partner with tenants for rental income and rent collection maximisation.

On 11 September 2020, AVN closed the day’s trade at AUD 2.330, down by 0.427 per cent. The last one-year return of the stock was noted at negative 14.29 per cent.

Bravura Solutions Limited (ASX: BVS)

Bravura Solutions Limited (ASX: BVS) is a software solutions provider for the life insurance, wealth management, and funds administration industries. The company has 18 offices across the United Kingdom, Australia, New Zealand, Europe, Africa, and Asia.

On 26 August 2020, the company released its full-year results for the period ended 30 June 2020. FY20 dividend and dividend reinvestment plan (DRP) highlighted by the company included:

For FY20, the company reported robust outcomes with revenue improved by 6 per cent to AUD 274.2 million as compared to AUD 257.7 million in FY19. Group EBITDA grew to AUD 57.8 million, up by 19 per cent as compared to AUD 48.6 million in FY19.

Furthermore, NPAT grew 22 per cent to AUD 40.1 million, compared with AUD 32.8 million in the year-ago period. Acquisitions delivered NPAT of AUD 3.0 million.

EBITDA margin increased to 21.1 per cent, and EPS grew by 10 per cent to 16.5 cps. The company declared unfranked final dividend of 5.5cps, bringing the full-year payout ratio to 67 per cent of FY20 NPAT.

BVS maintains a strong financial position with operating cash flow of AUD 32.4 million and net cash of AUD 99.1 million as at 30 June 2020.

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Other highlights included:

  • Recurring revenue up by 7 per cent in FY20 that comprised 77 per cent of total revenue.
  • Wealth Management revenue up by 2.0 per cent to AUD 180.4 million
  • Funds Administration revenue up 16.0 per cent to AUD 93.8 million
  • Bravura invested more than AUD 36 million in the product suite.
  • Demand is increasing for automation, and straight-through processing (STP), aided by Bravura's market-leading Sonata solution.
  • Despite the challenging environment, Bravura is providing mission-critical software infrastructure to the client base without any disruption.

FY21 Outlook – For the current financial year, the company has a strong sales pipeline with a growing number of transformational opportunities. Its strong and growing sales pipeline is driven by expansion into new markets, segments and acquisitive growth opportunities, as well as transformational opportunities from new clients.

On 11 September 2020, BVS closed the day's trade at AUD 3.340, down by 0.595 per cent. The last one-year return of the stock was noted at negative 28.05 per cent.

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