WAM Research 

Stellar Performance in FY18: WAM Research Limited (ASX: WAX) posted robust numbers for FY18 with 42.2% increase in the Operating Profit after tax at $21.6 Mn compared to $15.6 Mn in FY2017. The profit was boosted by sound investment strategy of the company with the largest contributions coming from the stocks including Afterpay Touch Group, Emeco Holdings, Bravura Solutions, Imdex, and Pinnacle Investment Manager.
The Board declared a fully franked dividend final dividend of 4.75 cents per share with payment date set on 26 October 2018. This brings the fully franked full-year dividend to 9.5 cents per share.  A dividend-paying trend of the company since inception suggests that management is committed to paying higher dividends, given the company earns enough profits. Since inception in 2003, the company has paid 89.9 cents per share fully franked dividends to the shareholders. The annual dividend yield of the company is 5.62%. Valuation-wise WAX looks impressive with Net Margin at 317.7% in FY18 compared to 220.0% in FY17. Return to the shareholders has also been good with ROE coming in at 9.4%.

Fully franked dividends since inception (Source: Company Reports)

The stock had a decent run on the bourses, generating YTD return of 11.18%. After breaching the resistance level of $1.606 a couple of months back, the stock has moved higher. The minor correction did not divert the course of the stock as it continues to trade strong. Going forward, the company looks committed to generate good returns on their investment and also pay shareholders a part of their profits consistently. We, therefore, recommend a ‘Hold’ in the stock at the current market price of $1.680.
 

Milton Corporation

Maintained Consistency to Pay Dividend: Milton Corporation Ltd (ASX: MLT) posted an underlying operating profit after tax at $128.8 Mn compared to $122.0 Mn in FY2017. The company recently declared its monthly NTA and portfolio report for August 2018 wherein NTA was recorded at $4.21 per share after tax. Milton has a sound track record of paying dividends consistently. A major part of the shareholder return in the Australian stock market comes from the tax effective dividend income and Milton has been committed to generating stable dividend income for the shareholders.

The full year ordinary dividend for 2018 has increased to 19.0 cents per share, from 18.7 cents per share in 2017, an increase for the eighth-time straight.

Dividend History (Source: Company Reports)

The stock has performed marginally in red since the start of the year generating negative YTD return of 2.77%. It is, however, showing the sign of rebounding as the stock has recovered from the support level of $4.539 and moving higher. Further, there is no divergence witnessed between the stock price movement and the momentum strength indicator suggesting that stock is poised to move higher from the current levels. Sound portfolio management with strong returns and maximizing the return of shareholders would continue to move the stock higher. We, therefore, recommend a ‘Hold’ on the stock at the current market price of $4.600.  
 

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