Who doesn’t love juicy dividends?
These five companies are also offering investors a cheap price – what more could you ask for?
Growth with that too? Ok, that might be asking too much – given some these companies have been under pressure in recent times to grow earnings. But rather than looking at that as a reason to avoid them, now may be the perfect time to cash in on cheap prices before earnings growth arrives and the share prices soar.
|Company||Share Price||Market Cap ($m)||P/E ratio||Div Yield*|
|FlexiGroup Limited (ASX: FXL)||$2.37||$882.5||9.1x||6.1%|
|Cedar Woods Properties Limited (ASX: CWP)||$5.50||$433.9||10.1x||5.2%|
|Reject Shop Ltd (ASX: TRS)||$7.83||$226.0||10.8x||5.6%|
|Flight Centre Travel Group Ltd (ASX: FLT)||$28.16||$2,844.6||11.5x||5.4%|
|Lifehealthcare Group Ltd (ASX: LHC)||$2.19||$93.5||12.0x||5.7%|
Source: Google Finance, S&P Global Markets Intelligence. *Dividend Yield is FY2016 trailing dividend
Flexigroup provides several types of no or low-interest flexible payment plans to many retailers’ customers and continues to branch out further – even offering no-interest loans to Flight Centre customers to pay for their travel trips. At its recent half-year result, the company confirmed it was on track to generate a full year 2017 (FY17) cash net profit of between $90 and $97 million. Yes, the company has lowered its dividend payout ratio – but that appears to be a short-term and prudent course of action.
Cedar Woods is a Western Australian-based property developer – but has expanded significantly into the east coast of Australia, with large developments in Melbourne, Adelaide and Brisbane. At the company’s half-year result, Cedar Woods declared a fully franked 12 cents per share dividend – the same at the previous period and said it was expecting to report a record net profit for FY17 of around $45 million.
The Reject Shop had a disappointing half-year result mainly it seems due to weak trading in Western Australia, but still managed to pay an interim dividend of 24 cents per share fully franked – down just one cent from the previous year. That suggests the company can maintain a similar level of yield for investors at the current price of around $7.80.
Flight Centre has been struggling with ongoing discounted airline tickets for some time now, despite increasing sales of tickets. In the first half of FY17, the dividend has been slashed by 25% to 45 cents per share as earnings per share dropped by 36%. No wonder Flight Centre’s share price has plunged from above $45 a year ago to just $28.15 currently. But most of the company’s problems appear short term in nature and should disappear over time.
Lifehealthcare Group is one company not may investors or analysts follow given its small market cap of less than $100 million. The company distributes medical equipment and accessories to hospitals, medical centres and surgeries around Australia. With products sourced offshore, it can be impacted by the Australian dollar exchange rate, and management has to be extremely diligent in managing working capital (i.e. inventories). While it may not deliver double-digit capital gains in the short term, Lifehealthcare could still be a useful addition to a diversified portfolio for its dividends.
Everyone knows the best time to buy stocks is when they are cheap. But that also means buying quality shares when they are unloved or out of favour with investors. The above five companies have the ability to generate decent earnings per share growth into the future – once their temporary issues resolve. That should see their share prices rise over time.
This company’s dividend is almost the stuff of legends. Since it started paying dividends in 2007, it has increased its payout to shareholders every single year, a run that includes 21 consecutive dividend increases.
Based on the last 12-months of dividends, its shares are currently offering a fully-franked 4.8% yield, which grosses up to almost 7% when those franking credits are included. And in stark contrast to the likes of Commonwealth Bank and Telstra, this company just increased its dividend by over 13%, and guided for 2017 profits to grow by 20%!
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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.