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As of 2024, the share price of Woolworths Group Ltd has experienced a decline of 8.4%. In contrast, CSL Ltd is currently 3.3% shy of its 52-week high. For investors considering potential opportunities, both of these companies, along with notable ASX growth stocks, might be worth adding to your watchlist.
Woolworths Group Ltd (ASX:WOW)
Founded in 1924, Woolworths Group Ltd is a leading retail operator in Australia and New Zealand, boasting over 3,000 stores and employing more than 100,000 individuals. It ranks among Australia’s top companies in terms of revenue and market share.
Woolworths operates primarily through its supermarkets—under the Woolworths brand in Australia and Countdown in New Zealand. It also runs discount department stores under the Big W brand and operates business-to-business (B2B) services through brands like PFD. The company holds a significant market share in Australian groceries, making it a major player in the sector.
The retail giant is favored by many ASX investors for its consistent dividend income. Historically, Woolworths has paid a fully franked dividend with yields typically exceeding 3%, benefiting from a defensive earnings stream driven by consumer staples. Woolworths’ competitive edge is reflected in its scale and proximity, as many consumers choose stores based on their convenience and low costs.
Evaluating Woolworths Group Ltd as a blue-chip stock involves examining key financial metrics like return on invested capital (ROIC) and revenue growth. In FY23, the company achieved an ROIC of 7.10%, with revenue growing at a compound rate of 6.8% over recent years. Although a mature business, if Woolworths consistently struggles to achieve a 10% ROIC, it may indicate potential challenges in capital investment efficiency.
CSL Ltd (ASX:CSL)
CSL Ltd is a global biotechnology leader specializing in innovative medicines that address critical health needs. The company operates through three main divisions: CSL Behring, CSL Seqirus, and CSL Vifor.
CSL Behring, acquired in 2004, focuses on manufacturing and distributing blood plasma products. CSL Seqirus, which resulted from the rebranding of BioCSL and the acquisition of Novartis’ flu business in 2015, provides flu-related products and pandemic-related services. CSL Vifor develops treatments for iron deficiency and nephrology (kidney care).
CSL has established a solid reputation among Australian investors for its reliability and consistent dividend payments. Investing in CSL is often seen as a way to benefit from the ongoing rise in healthcare costs.
Valuation Insight for Woolworths Group Ltd
One method to gauge the valuation of Woolworths Group Ltd is to analyze its dividend yield over time. Currently, the dividend yield for WOW shares stands at approximately 4.19%, which is above its 5-year average of 2.96%. This suggests that WOW shares are offering a higher dividend yield compared to their historical average, which could be an attractive feature for potential investors.
Woolworths Group Ltd and CSL Ltd present distinct characteristics and opportunities for investors. Whether considering the potential for dividend income or evaluating growth and stability, these stocks may warrant closer observation in the coming months.
