Perpetual Equity Investment Company Limited

PIC announces fully franked interim dividend: Perpetual Equity Investment Company Limited (ASX: PIC) has announced a fully franked interim dividend of 3.1 cents per share, 3% increase on 1H18. It will be paid on 26 April 2019 with record date of 4 April 2019. Additionally, Shareholders of the company will have an option of DRP (dividend reinvestment plan). The plan will operate at a 2.5% discount. The last election date for the DRP will be 5 April 2019. The Perpetual Equity Investment Company portfolio delivered a return of -6.5% for the first six months to 31 December 2018, outperforming the benchmark by 0.5%. The portfolio held 79% in Australian listed securities and 21% in cash.
 

Income Statement (Source: Company Reports)

The company’s total investment income came in at -$21.9 million in 1HFY19 vs. $30.6 million in 1HFY18. The drop in revenue was largely non cash and was due to the on-going market volatility, however, the income from dividends increased from $3.1 million in 1HFY18 to $6.3 million in1HFY19.


Interim Dividend (Source: Company Reports)

The Company remains focused on shelling out the dividends to provide a yield which compares favourably to the Australian market dividend yield.

The Australian Equity market fell by 8.4% during the December quarter and the management stated that during this period the company got an excellent opportunity to deploy the proceeds from the capital raised in quality companies at attractive prices.The funds have been fully invested.

Due to this, it can be said that the company has decent growth prospects. The annual dividend yield is 6.04%. The company’s stock has given a return of -9.01% and 0.95% in the span of previous six months and one month, respectively.
Based on the above-mentioned facts, we maintain our “Buy” rating on the stock at the current market price of A$1.060 per share.
 

WAM Capital Limited

Decent Performance since inception: Since inception,WAM Capital Limited (ASX: WAM) has paid $223 per share in fully franked dividends to shareholders and the company’s investment portfolio decreased by 9.3% in the six months to 31 December 2018, while S&P /ASX all ordinaries Accumulation Index fell by 7.3%.The investment portfolio held an average cash weighting of 31.3% during the period and as at 31 December 2018, the cash weighting was 43.9%. This was reflecting the cautious outlook at the end of the period, since the management wanted to ensure liquidity as they entered 2019. The company reduced its exposure from 113 to 89 individual companies.

However, the company saw some of its holdings perform well during this phase.The good performers were Afterpay Touch Group (ASX: APT), Scottish Pacific Group (ASX: SCO), Jumbo Interactive (ASX: JIN), Macquarie Media (ASX: MRN) and Bravura Solutions (ASX: BVS). The Board of Directors declared a fully franked interim dividend of 7.75 cents per share. As per ASX, the company’s annualised dividend yield stood at 6.92%. The company maintained the same interim divided as paid in FY 2018 despite the market volatility
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Fully Franked dividends since inception (Source: Company Reports)

Even though the management entered the year 2019 with a cautious outlook and higher cash allocation, the management has used the lower market levels to deploy the cash. This is evident from the investment portfolio’s cash level which is at 35.0% down from 43.9% on 31 December 2018. This clearly states the changed outlook of the management for the future. The stock price has moved by -10.84%, 0.90% and 7.69% in the past six-month, three month and one month respectively.

Hence, considering the robust dividend yields, decent investment performance since inception, and returns for the past one-month period, we maintain our “Buy” rating on the stock at the current market price of A$2.240 per share.
 

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