SHARES DIVIDENDS
Topupyourfutureincome
STOCKFORECAST
DIVIDEND
YIELDROE FORECASTROENET
DEBTTO
EQUITYFORECAST
CHANGE
INVALUE
Alumina(AWC) 12% 16% 32% 3% -19%
WhitehavenCoal(WHC) 10.6% 15% 18% 8% -25%
AirNZ(AIZ) 8.5% 18% 13% 55% 41%
BHPGroup(BHP) 8.5% 7% 19% 19% 5%
IOOF(IFL) 8.4% 12% 11% -29%* 6%
GenworthMortgage(GMA) 8.1% 4% 6% 11% 16%
Stockland(SGP) 7.5% 7% 8% 35% 5%
CSRLtd(CSR) 7.5% 18% 15% 0% -19%
SuperRetailGroup(SUL) 6.6% 19% 18% 59% 4%
HarveyNorman(HVN) 6.5% 13% 12% 25% -1%
* Negativefiguremeanscompanyhasmorecashthandebt.ROE:returnonequity.Basedontop 150 ASX-listedstock.AsofMarch11, 2019
Source:shareanalysis.com“Stocks with
stronger
balance
sheets and
sustainable
cash flows
are more
likely to ride
out short-
term issues”
TOP 10 NON-BANK DIVIDEND PAYERS
ALUMINA: What’s encouraging about the future sus-
tainability of the miner’s (fully franked) dividends is
the shape of its balance sheet, and strong return on
equity (ROE) outlook of 32%. Further softening of the
$A (below $US0.71), and stability in spot alumina prices,
around 25% above long-term estimates bode well for
future dividends.
WHITEHAVEN COAL: Despite an encouraging set of
interim numbers, including net profit up 19%, increased
operating costs place downward pressure on the share
price. The stock’s fortunes are wired to the coal price,
but medium-term outlook is encouraging, with India
and China expected to drive future demand.
AIR NZ: Has been under selling pressure since late January
following downgraded earnings, due to tougher trading
conditions, but the 41% forecast change in value is encouraging.
While the payout ratio may fall from 68.95% to 60.05%,
rising earnings per share (EPS) support the dividend at
current levels. Watch fuel prices and competition closely.
BHP GROUP: The big miner looks well placed to contin-
ue supporting excellent dividend returns on a modest
payout ratio at 50%-plus. Shareholders stand to benefit
from further price increases in the miner’s four primary
commodities, iron ore, coal, petroleum and copper.
IOOF: Due to the strength of its diversified business
model, it delivered a solid interim result, including
growth in underlying net profit after tax. With an interim
dividend payout ratio of 104.33%, management appears
confident of future earnings improvement. Having fallen
from the ASX-100, some funds may no longer need to
hold it. Reputational damage following damning royal
commission findings will take time to repair.
GENWORTH MORTGAGE INSURANCE: A 12-month payout
ratio of 94% means the dividend isn’t well-covered by its
earnings. A lower payout ratio of around 89%, coupled
with EPS weakness, could result in a lower dividend
payment. Despite a strong balance sheet, it’s heavily
leveraged to housing market weakness.
STOCKLAND: The payout ratio has been low compared
with other REITs. While it has the capacity to increase
this, it could be offset by any underlying weakness in
EPS growth, which has been poor.
CSR: Dividend payments have been relatively unstable
over a decade, with some years experiencing drops of
over 25%. The 12-month payout ratio of 71.9% means
the dividend is well covered by earnings. However,
watch out for any underlying EPS weakness.SUPER RETAIL GROUP (SUL): Strong long-term cash flow,
relative to its reported profits, supports the 12-month
payout ratio of 75.3%. While the payout ratio may fall to
65.7%, a strengthening EPS should support dividends.HARVEY NORMAN: A 12-month payout ratio of 89% means
the dividend is covered by earnings but any underlying
weakness in EPS could see falling dividend payments,
should the payout ratio drop to 80%, as speculated. M