2 Fully Franked Dividend Stocks – DDR and WOW

Stocks’ Details

Dicker Data Limited

Re-iterated full year pre-tax profit guidance of $42.5m for FY18: Securities of Dicker Data Limited (ASX: DDR) slightly rose up by 1.754% on April 24, 2018 after the release of solid results of its first quarter to 31 March 2018. According to the release, revenue for the quarter was $319.6m, 14.4% higher than the comparative quarter last year. This was partly because of realising full value of new vendors introduced during 2017 and strong performance with existing vendors. Profit before tax (PBT) stood at $9.2 million which is ahead of the company’s own estimates for the quarter and 22.8% higher than comparative quarter last year. As a result of this, PBT margin improved by 19 bps to 2.9% in Q1FY18 from 2.7% in prior corresponding period (pcp).


Q1FY18 Financials (Source: Company Reports)

Furthermore, the management expects the 1HFY18 results would be in line with internal estimates. With Q1 FY18 strong performance, which is ahead of the predicted numbers for the quarter, the management expects that the full year result will be achieved and it re-iterated full year pre-tax profit guidance of $42.5m for FY18. Moreover, the company proposed that the interim dividend for FY18 will be 4.40 cents per share fully franked. This would bring total proposed dividend to be paid in the FY18 year to 18.00 cents per share, which is an increase of 9.8% from FY17 dividend of 16.40 cents per share. According to FY17, the Group has delivered strong ROE of 36.2% against 35.2% in FY16 and paying regular dividends reflects healthy financials of the company. We give a “Hold” recommendation on the stock at the current market price of $ 2.900.
 

Woolworths Group Limited

Dividend Rise and Better Earnings expected in Upcoming period: Woolworths Group Limited (ASX: WOW) focuses on its business and aims to deliver a consistently good experience for the customers and leverages end-to-end process redesign and technology to improve the underlying productivity. In Australian Food, the Group will begin to cycle the strong second half sales recovery in FY17, which may see a moderation in the sales growth rate, and FY18 will continue to be a year of investment for New Zealand Food. The Group will continue to focus on delivering towards the BIG W turnaround plan, but there remains much more to be done with improving the stock flow in a particular area of focus for the second half. In April 2016, the Group introduced a 1.5% discount on the dividend reinvestment plan. The objective of the discount was to provide some funding flexibility to the business. But this time, the Board has decided that the discount will not apply to the October 2018 final dividend and for the foreseeable future. On the other hand, the group recorded sales growth of 3.8% from continuing operations that amounted to $29,807 million in 1HFY18. The growth of 4.9% and 4.8%, respectively, in Australian Food and Endeavour Drinks led to the overall growth. NPAT attributable to equity holders of the parent entity from continuing operations grew by 14.7% as compared to prior corresponding period (pcp). As a result of this, EPS was up by 13.7% to 69.7 cents in 1HFY18 as compared to pcp. Additionally, WOW expects better second half results than the prior year and the loss before interest and tax for FY18 from BIG W is currently expected to be in the range of $80 - $120 million. Further, the group declared a fully franked interim dividend of 43 cents per share which was paid on 6 April 2018, representing a significant dividend rise over previous corresponding period.
 

Historical Dividend Performance (Source: Company Reports)

Moreover, the Company disclosed to ASX that one of its directors, Scott Perkins has direct and indirect interest in the Company and further acquired 273 shares through the dividend reinvestment plan at a share price of $26.295560. Additionally, two directors i.e., Gordon Cairns and Siobhan Mckenna who have indirect interest in the company also acquired 435 and 48 shares, respectively through the dividend reinvestment plan at a share price of $26.295560. Based on historical dividend performance and better earnings expected in upcoming quarter on the back of growing demand for fresh produce by investing in quality and range, we give a “Buy” recommendation on the stock at the current price of $ 27.020.

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