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Highlights
- Ridley Corporation (RIC) offers stable dividend payments with a solid earnings cover.
- SHAPE Australia (SHA) provides a competitive yield despite volatility concerns.
- Santos (STO) maintains a high yield but faces sustainability challenges.
The Australian Securities Exchange (ASX) has demonstrated resilience, rising to 8,305 points as the holiday season approaches. Sectors like Telecommunications, Real Estate, Financials, Industrials, and Health Care have performed notably well, sparking interest in ASX dividend stocks for income-focused portfolios. Here is a look at prominent stocks in the dividend-paying category.
Ridley Corporation (ASX:RIC)
Ridley Corporation operates within the animal nutrition sector, offering solutions through its Bulk Stockfeeds and Packaged/Ingredients segments. With a market capitalization of approximately A$856.20 million, Ridley has shown consistent dividend performance. The Bulk Stockfeeds division generates significant revenue of A$886.59 million, while the Packaged/Ingredients segment contributes A$376.31 million.
Ridley’s current dividend yield is 3.5%, with payments covered by earnings at a payout ratio of 71.7% and solid cash flow support at 41.3%. Although its dividend history has experienced volatility, consistent growth over the past decade demonstrates resilience. The recent addition of Dan Masters as a non-executive director signals changes that could influence the company’s strategy and dividend sustainability.
SHAPE Australia (ASX:SHA)
SHAPE Australia focuses on construction, fitouts, and commercial property refurbishments across Australia. With a market cap of A$235.47 million, SHAPE has emerged as a notable dividend provider. The company’s primary revenue stream comes from its heavy construction segment, generating A$839 million.
SHAPE Australia boasts an impressive dividend yield of 6.3%, placing it among the leading dividend payers in Australia. However, its payment history has been inconsistent, reflecting short-term volatility. Dividends remain sustainable, with a payout ratio of 88.3% supported by cash flows at 53.2%. The company’s acquisition-driven growth strategy could impact future payouts but also offers potential for diversification and long-term value creation.
Santos (ASX:STO)
Santos operates within the energy sector, focusing on hydrocarbon exploration, production, and marketing in Australia and Papua New Guinea. Santos has a market cap of A$20.96 billion and generates significant revenue across regions like Papua New Guinea, Queensland, Western Australia, and the Cooper Basin.
With a high dividend yield of 7.4%, Santos ranks among the top-paying Australian stocks. However, its dividend track record reveals volatility, with an earnings payout ratio of 78.4%. The company’s free cash flow coverage, at a cash payout ratio of 164.4%, raises questions about long-term sustainability. Recent executive changes and forecasts for growth highlight the need for stability as the company navigates future challenges.
Dividend stocks remain key focus areas on the ASX as December progresses, with companies like Ridley Corporation, SHAPE Australia, and Santos offering unique income-generation profiles for shareholders.
