Retail Food Group Limited (ASX: RFG) had a terrible trading day today with its share price crashing by 23% after Fairfax media reports over the weekend regarding its treatment of its franchisees.
The short sellers had been circling over RFG for a while hence why I flagged it as a stock you'd love to buy but shouldn't.
Investors looking for an alternative to RFG might want to consider Suncorp Group Ltd (ASX: SUN). Here are its key metrics:
- Dividend yield. Suncorp has a 100% franked dividend yield of 5.1% compared to a market and sector average of 3.9%. Competitors Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE) have dividend yields of 4.6% and 5.2% respectively.
- Dividend payout ratio. Suncorp has a dividend payout ratio of 88% i.e. 88% of its FY 2017 profits were paid out as a dividend. This suggests that its dividend amount is fairly sustainable and can be maintained should earnings drop slightly.
- Dividend growth rate. Suncorp has an average 5-year dividend growth rate of 12.8% which is similiar to IAG's 14% and higher than QBE which has had a decline in dividends over the last 5 years.
- Dividend stability. Suncorp has a dividend stability of 96.7% which is consistent with the sector average.
- Valuation. Suncorp has a PE ratio of 17 that is lower than the sector average of 21 consistent with the market average. Its price to earnings growth ratio of 1.69 also suggests a more conservative valuation compared to the sector average of 2.87.
- Future prospects. Suncorp recently implemented a new operating strategy which aims to allow the Group to leverage off its product portfolio and cross sell between its different brands. So far, this seems to be working well and could pay dividends going in the future.
If Suncorp is not for you, you might want to consider our number one dividend pick to grow your wealth over the new year.
