Charter Hall Group lifts dividend and earnings: Should you buy?

Charter Hall Group (ASX:CHC) reported a 45% lift in net profit, but a weaker increase of 8% in operational earnings and its dividend.

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Charter Hall Group (ASX: CHC) is confident about the future of the property business after it announced a 44% increase in net profit after tax to $118 million at its full-year results for the 2015 financial year.

The more important metric for Charter Hall is operating earnings which increased by 21.7% to $99 million. However, operating earnings per share increased by a more modest 8.7% to 27.5 cents due to an equity raising completed during the year which increased the number of shares on issue.

The full-year dividend was increased by 8.5% to 24.2 cents per security and the results weren't enough to impress investors with the stock price flat around $4.40 during morning trade.

Joint Managing Director David Harrison said, "we expect Australian property to remain attractive to both domestic and offshore investors given the high Australian property yield spread to bond yields."

Charter Hall is a leading owner and manager of commercial properties around Australia. During the financial year, the company achieved 18% growth in Australian funds under management to $13.6 billion.

$187 million was co-invested into property funds during the year. Net cash increased by $101 million and the company finished the year with $151 million cash in the bank.

The company boasts some impressive metrics throughout its industrial, retail and hospitality portfolios. The weighted average lease expiry is now 9.1 years compared to 7.6 years a year ago whilst occupancy levels remained stable during the year at 97.7%.

A $225 million equity raising completed during the year enabled the group to fund additional equity investments alongside its capital partners whilst providing additional cash for future opportunities.

Mr Harrison noted "that the cost of debt remains near record lows and we will continue to deliver on our strategy to provide attractive property opportunities for our investors and tenants".

The Australian property market continues to perform well and during FY16 the company expects 5-7% growth in operating earnings whilst the distribution payout ratio will be between 85-95%.

At the current price of $4.40, the stock offers investors an unfranked dividend yield of around 5.5%,

Motley Fool contributor Mitch Sonogan 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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