CSL (ASX:CSL) dividend boosted 10%. Shares slide regardless

CSL shares are falling despite a larger payout to shareholders.

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The CSL Limited (ASX: CSL) share price is falling despite the biotech business announcing a hefty increase to the CSL dividend.

What’s happening to the CSL share price?

At the time of writing, CSL shares are down 2% after the healthcare business released its FY21 result.

That was despite the business telling investors that its net profit was strong in the financial year that recently finished.

CSL reported that net profit after tax (NPAT) grew by 10% in constant currency terms to US$2.375 billion. This was driven by revenue growth of 10%.

The ASX share boasted of strong growth for its HIZENTRA product as well as its HAE product, HAEGARDA.

CSL’s new distribution model in China is now fully operational, with sales of albumin now normalised.

As readers might imagine in the current environment, there was an “exceptionally strong” performance by its influenza vaccine business, Seqirus.

CSL dividend

The board of CSL decided to declare a final dividend of US$1.18 per share, which would be approximately A$1.61.

That brings the full year dividend to US$2.22 per share. This represents growth of 10% compared to FY20.

Operational highlights

The company said it opened 25 new plasma collection centres during the year. It’s planning to open up to 40 new centres in FY22.

It highlighted collaboration with Terumo to deliver a new plasmapheresis platform.

A new ‘state of the art’ immunoglobulins facility has been completed in Bern, Switzerland. A new $900 base fractionation facility at Broadmeadows is “well advanced”. New global headquarters in Melbourne are also well underway. Seqirus fill and finish expansion projects at Liverpool and Holly Springs are also well advanced. CSL is doing a lot of capital projects.

What is the outlook for CSL and the dividend?

The company said that demand for its core plasma products remains robust. Plasma collections are expected to continue to improve following multiple initiatives that the company has implemented.

CSL is confident of a global recovery, with vaccinations leading to greater social mobility and more normalised conditions.

Increasing collections today underpins its expectation of an increase of supply of therapies to patients. However, increased plasma costs are expected to continue into FY22.

The vaccine business Seqirus is expected to continue to perform well.

CSL sees FY22 as a transitional year as it continues to invest and deliver against its long-term strategy.

FY22 net profit after tax is expected to be between US$2.15 billion to US$2.25 billion at constant currency. That means profit is currently expected to decline a little.

Using the current estimate on Commsec, the CSL dividend (in Australian dollars) is expected to be $3 per share in FY22, which would be small increase on FY21. But then the FY23 CSL dividend is projected to jump to $3.53 per share.

Should you invest $1,000 in CSL right now?

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. 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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