Incitec Pivot investing now for future dividends

Lee Mickelburough Head of Perennial Growth Management raises his concerns about the lack of corporate investment in growth initiatives. “For too long companies have been taking the easy option, paring back the growth plans of their businesses and returning cash to shareholders… Many investors are currently focused on ASX Top 20 stocks, which comprise 65% of the market. The yield on that basket of stocks is a bit over 4% however the average payout ratio is 85%.” Mickelburough says investors should be more focused on companies investing to grow their earnings, which will ultimately see more sustainable dividends. "For example, Incitec Pivot, the Australian multinational corporation that manufactures industrial chemicals, fertiliser and explosives, currently trades on a 3% yield. However the company’s payout ratio is a conservative 52%. Management have also been investing to grow the business… The returns from this investment are expected to drive dividend growth. We estimate the dividend will grow strongly over the next three years and this dividend growth will result in a yield above 4.5%” Read the full article here: (VIEW LINK)


The Livewire Equities feed brings you a range of insights that relate to Australian equities

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

trending on livewire
Get the best of Livewire by signing up to our popular daily newsletter