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Kelsian Group Ltd (ASX: KLS), an ASX dividend stock, has seen a notable divergence from its recent highs. The Kelsian share price has declined approximately 50% since April 2021 and 25% over the past year, as depicted in the accompanying chart.
Positioning itself as Australia's largest integrated multi-modal transport provider and tourism operator, Kelsian boasts operations spanning Australia, Singapore, the USA, London, and the Channel Islands. As of December 31, 2023, the company operates 5,500 buses, 115 vessels, and 24 light rail vehicles, establishing a robust presence over its 30-year operational history. Notably, Kelsian prides itself on leading in sustainable public transport, featuring Australia's largest fleet of zero-emission buses and an electrified bus depot.
While not the most widely recognized ASX dividend stock, Kelsian presents a compelling investment opportunity, particularly for passive income seekers. The company has consistently increased its annual dividend per share since 2021, a commendable feat amidst recent economic uncertainties. Currently, it offers a fully franked dividend yield of 3.3% and a grossed-up dividend yield of 4.8%. Analyst estimates from Commsec indicate potential for further growth, projecting an annual dividend per share of 22.7 cents in FY25, translating to a grossed-up dividend yield of 6.2%, and 25 cents per share in FY26, yielding 6.8%.
Looking ahead, Kelsian anticipates earnings growth, supported by its robust financial performance in FY24. The company reported a 44.9% revenue increase to $982.7 million, driven by strategic acquisitions and new contract wins in Sydney. Underlying EBIT grew by 29.4% to $58.1 million, with statutory net profit after tax (NPAT) rising by 44.1% to $28.1 million. The company's outlook remains optimistic, citing economies of scale, operational efficiencies, and global procurement opportunities as growth drivers. Moreover, Kelsian is well-positioned to capitalize on expanding market opportunities, particularly in decarbonization initiatives and new contract ventures in high-growth Sydney corridors.
In summary, Kelsian Group Ltd presents an enticing proposition as an ASX dividend stock, combining solid dividend yields with promising earnings growth prospects in the evolving transportation sector.
