As of last Friday, around 70% of ASX-listed companies have reported their financial results to 31 December 2013. We've seen 54% of companies exceed expectations, 64% increase profits, and 70% increase dividends, however only 52% of companies have outperformed the market on the day that they released results.
A major trend I've spotted, along with many others, is the increased energy companies are putting into emphasising shareholder returns. So far we've seen the big players including Telstra Corporation Ltd (ASX: TLS), BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO), among others, boost their dividend payout to the delight of shareholders.
While the big names have taken the majority of headlines, there are a few established companies in the industrial sector that are boosting earnings and revenue just as well as their larger counterparts.
Toll-road operator Transurban Group (ASX: TCL) is one such company. In the 6 months to 31 December, group revenue jumped by 12%, cashflow increased by 13% and accordingly the company gave guidance that the full-year dividend payout would be 35 cents per share, up 13% on last year's 31 cents.
This will put the company on a yield of around 5% based on the current price, which, at around 20% franking, is 5.4% grossed up.
Similarly, Aurizon Holdings Ltd (ASX: AZJ) operates Australia's largest coal rail network and associated freight business and is heavily exposed to volume growth in coal and iron ore. The group reported a 19% rise in earnings before interest and tax for the half to 31 December, and declared an interim dividend up 95% on the previous period. Based on the final dividend equalling the interim 8 cents per share dividend, the company is currently yielding 3.1%, at 80% franking, or around 4% grossed up.
Foolish takeaway
The two companies above are showing that they have the ability to grow both dividends and earnings at a time when the domestic economy is performing poorly. Both operate near-monopolies in their respective areas of operation and maintain significant competitive advantages over both rivals and new entrants due to the high infrastructure cost to compete. Both are expected to grow earnings and dividends into the future, just like their larger peers.
