Eagers Automotive, Why Analysts See This Dividend Stock as a Buy

2 min read | January 02, 2025 12:07 PM AEDT | By Team Kalkine Media

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Highlights:

Market Leadership: Eagers Automotive operates over 250 locations and holds franchises for 19 of the top 20 car brands in Australia.

Dividend Yield: Fully franked dividends expected at 5.6% for FY 2024, increasing to 6.2% in FY 2025.

Price Target of AU$13.00: Bell Potter sets a price target of AU$13.00, indicating a potential upside of around 10%.

Eagers Automotive (ASX:EAG), a prominent auto retailer in Australia and New Zealand, is receiving attention from analysts as a solid investment opportunity, especially for income-focused investors. The company operates over 250 locations and holds franchises for 19 of the top 20 best-selling car brands in Australia, giving it a dominant position in the automotive retail market.

Bell Potter, a well-respected investment firm, believes that Eagers Automotive is well-positioned to exceed consensus expectations in the second half of FY 2024. This positive outlook adds confidence in the company’s ability to deliver strong financial results, further enhancing its appeal as a dividend stock.

Impressive Dividends Expected in FY 2024 and FY 2025

For FY 2024, Eagers Automotive is expected to deliver fully franked dividends of 66.5 cents per share, providing a dividend yield of 5.6% based on the current share price of AU$11.84. Looking ahead to FY 2025, the company anticipates an increase in dividends to 73 cents per share, translating to a higher yield of 6.2% at the current share price.

This consistent dividend growth makes Eagers Automotive a particularly attractive option for investors seeking reliable income streams. With a solid dividend yield and strong potential for growth, the company offers a compelling combination for dividend-focused investors.

Price Target and Growth Potential

Bell Potter has set a price target of AU$13.00 for Eagers Automotive, suggesting an upside potential of around 10% from its current price. The combination of solid dividend payments and expected capital appreciation positions Eagers Automotive as a promising investment in the auto retail sector. The company's strong market presence, expected strong performance in the second half of FY 2024, and commitment to delivering growing dividends support the analysts' positive outlook.

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