Reporting season dividend diary: BHP delivers again for income investors
Plato's analysis on recent results from BHP, JBH, TLS & VNT
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So far, so good for income investor during this February ASX reporting reporting period.
There's been some great results this week from well-known dividend stocks including, BHP (ASX: BHP), JB Hi-Fi (ASX: JBH), and Telstra (ASX: TLS).
But as we always say, when seeking to maximise dividend income, an active and highly diversified portfolio that goes beyond traditional high-yield, large-cap Australian stocks is critical.
Ventia Services (ASX: VNT), a lesser-known holding in the Plato Australian Shares Income Fund, also delivered a solid result this week announcing an interim dividend of 12.4 cents, up 18% on last year, putting the infrastructure services provide on a annual gross yield of 5.4%.
Here's the latest analysis from Plato's reporting season updates which we regularly send to clients.
BHP's Bonanza
Mining stocks have been a big part of the Plato Australian Shares Income Fund for many years - and despite periods of fear and uncertainty surround the sector, they have continued to deliver for our investors!
BHP's profit is 22% up on last year, and what some investors may not have picked up is that we always used to call BHP the big iron ore miner in Australia, but it's actually turned into the big copper miner.
Its copper earnings were actually higher than its iron ore earnings last year, and more than 50% of profits.
Its dividends are now up 46% on last year. So after decreasing its dividends the last couple of years, it has bounced back, which is great for dividend investors.
Of note, BHP announced a new copper project, so they're not sitting on their laurels. They're trying to get even more into copper, which looks like a really good move at current prices in terms of the value that it adds to BHP.
Also, BHP raised a just over US$4.3 billion through a long term silver streaming agreement. This has put more money on its balance sheet.
JB Hi-Fi's resilience
The JB Hi-Fi share price has been under pressure since about October last year when we got the higher than expected inflation numbers and the market started to price in interest rate increases. But JB Hi-Fi's results were pretty good.
Their sales were up 7.3% on last year. EPS was up 7.1%, which was marginally above expectations, and because of that downward trend in its share price recently, it actually has bounced back strongly over the last couple of days.
Its final dividend was up 24% on last year. That might've surprised some investors, but they did actually announce back in August that they were increasing their payout ratio from about 50% up to 70-80%.
Its sales in January are a little bit slower. This was the one disappointment, but the company did pointed out that more people are starting to shift their consumer behaviour - rather than shopping in January, which was typically when Australians would shop for bargains, shoppers have moved to November to take advantage of the Black Friday sales.
All up, a positive result for dividend watchers
Telstra's return to dividend darling status
It was a really solid result from Telstra. Its profit was up 8% on last year, and it actually increased its dividends by 10.5%.
You might think with EPS of 9.9 cents, paying out 10.5 Cents in dividends is too much. But the reason for that was actually their cash EPS was up at 14 cents per share and increased 17% on last year. This is because they've been able to reduce their Capex, which has meant their depreciation continues to go down, but they're actually not spending as much on renewing their network.
They also showed their mobile subscribers are going up by 5% with really good cost control and it had a slight top-up of their buybacks by 250 million.
We like the result. We like it a lot.
Ventia Services - a hidden gem for income investors
This was a s stock that I raised on a Livewire Buy Hold Sell episode not too long ago.
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It's a little-known stock in infrastructure services. It's quite defensive with a lot of telco revenue, as well as defence contract revenue.
It was able to increase its profits by 13% on last year and it posted an 18% increase in dividends, which equates to a 5.4 gross annual yield.
It also increased its buyback by $100 million and guided for 7% to 10% profit growth, which was about 4% above expectations.
No surprise, the market really liked it.
This is a name that most income investors wouldn't naturally hold in their portfolio, but we've liked it for quite some time and it has delivered both good yield and capital growth for the Plato Australian Shares Income Fund.
You can watch our client video update, recorded earlier today, below.
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Peter is a Senior Portfolio Manager and manages the Plato Australian Shares Income Fund. He is a founder of Plato and has 15 years investment experience. Peter received 1st Class Honours and a PhD from UNSW.
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Any opinions or forecasts reflect the judgment and assumptions of Plato and its representatives on the basis of information at the date of publication and may later change without notice. Any projections contained in this article are estimates only and may not be realised in the future. The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. This article is for general information only. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice relevant to their particular circumstances, needs and investment objectives.
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Peter is a Senior Portfolio Manager and manages the Plato Australian Shares Income Fund. He is a founder of Plato and has 15 years investment experience. Peter received 1st Class Honours and a PhD from UNSW.
Expertise
Peter is a Senior Portfolio Manager and manages the Plato Australian Shares Income Fund. He is a founder of Plato and has 15 years investment experience. Peter received 1st Class Honours and a PhD from UNSW.
Expertise
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