MENU

Mirvac Group looks to benefit from upswing in property sector

Property developer and investor Mirvac Group (ASX: MGR), has maintained guidance for strong growth earnings in FY14. The group owns a diverse portfolio of retail, commercial and residential properties across Australia and hopes to benefit from an upswing in the residential property market.

The group reaffirmed earnings guidance of 11.7 – 12 cents per share for FY14, versus the 10.9 cents per share achieved in FY13. This would mean approximate earnings growth of 10% in FY14 and a potentially rewarding year for investors.

The shares caught an updraft in August, after the release of full-year results and house price data showing an upturn in Australia’s residential property market.  Low interest rates have fuelled higher volumes and prices in the residential market. The group said its overweight position in developments in NSW and Victoria should continue to drive earnings. Nearly three-quarters of all developments are in these two states. Other companies with exposure to a rising residential property market include Australand (ASX: ALZ) and Stockland (ASX: SGP).

The group also said it expected 2013 would represent “the trough” in a weak office rental market. With 32 office properties in mainly CBD locations, Mirvac will be hoping that 2014 does indeed see a demand turnaround for rental space. To put in context just how weak the market has been, the Australian Financial Review recently reported that vacancies in Australia’s CBD towers are at their highest level since 1999.

The group also forecast a full-year dividend per share payout, between 8.8 and 9 cents per share. This would put it on an approximate forward dividend yield of 5% and forward price to earnings ratio of 15.

Foolish takeaway

Rising house prices have driven the stock higher since August and it remains on an attractive yield for income seeking investors. With the stock approaching 52-week highs, investors should be patient. Softness in the key office and retail spaces remains an issue and the valuation may see a pullback.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool Contributor Tom Richardson does not have a financial interest in any of the mentioned companies.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!