For some investors, a stable dividend stream is the holy grail – the key is to invest in companies that can sustain their payouts going forward.
I've had a look at three companies which appear to fit the bill pretty well.
Let's take a look.
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Atlas Arteria Ltd (ASX: ALX)
This toll road company is exactly the sort of business that I think most dividend investors are searching for.
Infrastructure companies such as Atlas Arteria tend to have long-term, stable contracts, with good visibility out over potentially several years, especially on the cost front.
Atlas Arteria is currently paying a trailing dividend yield of 8.67%, which is high, but investors can take heart from what the company said when announcing its full-year results in February.
The company not only reaffirmed its final dividend of 20 cents per share but also said it would target future full-year distributions of at least 40 cents per share, "supported by free cash flow".
While that's not an ironclad guarantee, it's a strong indication that the company will continue paying out strong returns.
Helloworld Travel Ltd (ASX: HLO)
Helloworld makes the list for both strong returns and potential upside in its share price.
Shaw and Partners issued a research note this week saying that strong traveller arrival and departure numbers for January boded well for the travel operator, and they set a price target of $2.80 on the stock, compared with $1.47 currently.
The broker is predicting a dividend yield of 7.5% for the current financial year, rising to 8.2% over the subsequent two years.
Helloworld shares have been sharply sold off since the conflict in the Middle East began, and are not far off their 12-month lows of $1.30.
Perpetual Ltd (ASX: PPT)
Financial stock Perpetual is paying a 7% dividend yield, and just this week announced the $500 million sale of its wealth business to Bain Private Equity, in a move that will simplify the business.
The company said the money raised would be used to retire debt and foster organic growth in its two remaining business divisions. This surely puts the company in a good position to maintain its dividend flows.
Macquarie had a look at the wealth deal this week and put out a research note to its clients forecasting a dividend yield of 7% this financial year, which would then fall to 6.7% in FY27 and 6.4% in FY28.
The analyst team at Macquarie also has a bullish share price target of $24.60 for the stock, compared with $15.99 currently.
