IOOF Holdings Limited (ASX: IFL)

Consistent returns to shareholders as dividends: IOOF Holdings Limited (ASX: IFL) achieved positive net flows of $1.0 Bn in funds under management, administration, and advice (FUMA) for the third quarter of the 2018 financial year. FUMA as at 31 March 2018 totalled $118.8 Bn and funds under supervision were $33.8 Bn. There was a 35% rise in Advice flows. The result falls in place with continued clients value service excellence. With a view that organic growth is crucial for IFL’s advice-led strategy, acquisitions are expected to add to the growth. During the first half of the year, the Board of Directors declared an interim fully franked dividend of 27 cents per share (representing a 100% of dividend payout ratio and it was paid in March 2018). The group is in strong financial position with zero debt facility and significant free cash of $157.62 Mn as on December 31, 2017.Looking at historical dividend performance, the company will continue to pay its dividend to its shareholders in the range of 60%-90% in terms of dividend payout ratio of underlying profit after tax. 

 

Dividend Trend (Source: Company Reports)

Meanwhile, IFL stock has fallen 13.20 per cent in the past three months as at June 22, 2018 and is trading at a higher PE level (32.66x) as compared to its peer group within the same sector. Hence, we maintain our “Hold” recommendation on the stock at the current price of $ 9.310, considering the fundamentals and focus on the group’s advice-led strategy which can exhibit another strong quarter growth. The group has a dividend yield of 5.86%.
 

Boral Limited (ASX: BLD)

Delivering decent returns and capturing growth - The Group announced some changes in the Board i.e., Dr. Brian Clark will retire as Chairman of Boral and as a Non-executive Director on 30 June 2018 due to health reasons; and BLD appointed current Non-executive Director Kathryn Fagg as its Chairman, who will be taking responsibilities from 1 July 2018. As part of Boral’s ongoing Board renewal program, the Board also announced the appointment of its first North American-based Non-executive Director, Peter C Alexander, effective from 1 September 2018 with the objective of expanding North American Division.

Lately, the group inked a deal with Mirvac to incorporate an extra 278 hectares of land in the development arrangements for Boral's Donnybrook property in Victoria. Under the arrangements, Mirvac will encourage the urban development of the 465-hectare sites over a multi-decade time frame. BLD will release its full-year FY2018 result on 29 August 2018. Donnybrook contributed to $9 million earnings this year and BLD expects property earnings to be at the high end of its guidance range of $55-$65 million of EBITDA for FY2018. Significant earnings are expected from FY2028 to FY2037 as the land is being progressively developed. It continues to focus on costs and on operational improvements through continuing operational excellence initiatives, implementing Supply Chain Optimisation program and by leveraging digital innovation opportunities for cost and safety. The stock declined by 12.40 per cent in last three months but rose in last five days by 4.5% on June 25, 2018. Hence, we give a “Buy” recommendation on the stock at the current market price of $6.58 by looking at the potential and decent dividend yield 3.73%.


Business Segments (Source: Company Reports)

 
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