When the company debuted in 2014, thousands of everyday Australians became shareholders in Medibank Private Ltd (ASX: MPL), Australia’s largest health insurer. Many more investigate the company with a view to earning reliable dividends – and that’s great, I think Medibank is a solid dividend prospect.
It’s just that at today’s prices, its 4% yield is starting to look a little slim. Here are 2 companies that could be a viable alternative:
BWP Trust (ASX: BWP) – yields 5.8% unfranked
BWP Trust owns properties that are leased to Bunnings Warehouse, owned by Wesfarmers Ltd (ASX: WES). The property portfolio has attractive metrics, with gearing (debt) of 21% and a weighted average lease expiry (WALE) of 5.5 years. The Trust is trading at a modest premium to its net tangible assets (NTA) of $2.60 per share, but in this sense, it looks like one of the cheaper property trusts out there now.
There is some uncertainty regarding the likelihood of leases being re-signed after the 5-year period. Tenant Bunnings intends to vacate a small number of properties so it can relocate into stores that it recently bought from Masters Hardware. However by and large, BWP appears an attractive income idea and is worthy of further investigation.
Genesis Energy Ltd (ASX: GNE) – yields 8.3% unfranked
Genesis Energy is a New Zealand utility that operates a mix of hydro and thermal power generation assets, as well as owning an oil and gas business. While profits that fluctuate according to the weather are not ideal, the business generates strong free cash flow. An organisational restructure has been reducing customer churn, and increasing the amount of self-service transactions that customers can perform (lowering costs and improving customer satisfaction).
Management continues to expect to reduce costs and customer churn, as well as potentially growing new customer connections and its market share in the LPG segment. Genesis has gearing of 35.6% which is not unreasonable, and the dividend speaks for itself. I think it is worth a closer look from income-seeking investors.
Here are 3 more promising income prospects, with the added benefit of fully franked dividends:
For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you’re expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you’ll be sorely disappointed. Not only are their dividends growing at a snail’s pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these “new breed” blue chips couldn’t be greater… especially the very real prospect of significant share price gains, something that’s looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Sean O'Neill 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.