3 reasons to stick with your SEEK Limited shares

Almost anybody who has looked for a job in Australia in the past five years is likely to have come across online employment classifieds company SEEK Limited (ASX: SEK).

Whilst in days gone by job seekers would flock to hardcopy newspapers published by Fairfax Media Limited (ASX: FXJ) and News Corp (ASX: NWS), nowadays they flock to online web portals to review job advertisements.

More often than not, that portal belongs to SEEK which now boasts of attracting over 35-million visits per month to its Australian website and over 340-million monthly visits to its international sites.

There are many attributes to like about SEEK. Here are three which stood out at the company’s recent Macquarie Conference presentation…

International expansion – While SEEK already has a significant share of the domestic industry, its global operations in many ways are just scratching the surface.

SEEK’s international operations only began contributing to the group in 2011 but by 2015 this division was rivalling the domestic division in terms of its contribution to earnings before interest, tax, depreciation and amortisation (EBITDA).

Growth set to continue – Since SEEK’s initial public offering of shares in April 2005 the total shareholder returns (TSR) – that’s share price gains plus dividends – has been a whopping 650%. In comparison, the TSR of the S&P/ASX 100 (Index: ^AXTO) (ASX: XTO) has been approximately 100%.

This is an outstanding return and while it might be unrealistic to expect similar rates of outperformance in the future, they also can’t be ruled out given the global expansion opportunities that still lie ahead.

Indeed, given the size of the global opportunity compared to SEEK’s domestic market share, the future EBITDA contribution from the international division has the scope to be much, much larger.

Dividend growth – Part of the beauty of SEEK’s business model is the high operating margins and the significant cash flows produced.

At the recent interim results, the board raised the dividend by 10.5% to 21 cents per share. With earnings growth set to continue, shareholders can reasonably expect the dividend to continue to rise at a steady clip too.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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