3 Interesting Dividend based LIC Stocks – NCC, WAX, APL

Stocks Details

NAOS Emerging Opportunities Company Limited

Strong Dividend yield & pay-out Ratio for Investors: NAOS Emerging opportunities Company Ltd (ASX: NCC), is an investment company incorporated in Australia. The Company has been established to invest primarily in a concentrated portfolio of listed entities that are outside the S&P/ASX100 Accumulation Index. The Company believes that there are excellent opportunities for investment in such emerging companies.

It has a market capitalization of $72.49 Mn as of November 09, 2018. The profit for the year ended June 30, 2018 was $4.1 Mn, while the company has paid a fully franked dividend of 7.25c which is an increase of 3.6% on a Y-O-Y basis. The historical fully franked dividend yield stands at 5.78%. If we analyze the investment portfolio performance for three years, NCC portfolio has provided a return of 14.53% p.a. as compared to the “ASX small ordinaries accumulation index” which has given a return of 15% p. a, however throughout five years the portfolio has delivered a gain of 14.92% p.a. v/s the 11.52% p.a. provided by the index. Further, the company believes that COG and BSA could be growth catalysts that may drive significant shareholder returns over the next 12 months, but more importantly they are entering the year on sound financial footings with a good level of earnings momentum behind them.


NCC Fully Franked Dividend Payments Trends (in Cents) (Source: Company Reports)

Meanwhile, the stock price has fallen over the past one month by 3.17%, also over the period of past six months the stock has given a negative return of 3%, moreover if we look at the YTD performance, the stock is down by 17.29%, which shows a volatile performance. Taking into account of maintaining decent dividend pay-out ratio of 36.02% (TTM basis) with better dividend yield than Industry average, we recommend a “Speculative Buy” rating on the stock at the current market price of $1.220.


NCC Daily Chart (Source: Thomson Reuters)
 

WAM Research Limited

Strong operational Performance to drive the growth: WAM Research Ltd (ASX: WAX), is a listed investment company with the market capitalization of $282.45 Mn as of November 09, 2018. The revenue from ordinary operations was $ 32.426 Mn while the profit for the year ended June 30, 2018 was $21.60 Mn, up by 38.5% on a Y-O-Y basis. The company has paid a fully franked dividend of 9.5c which is an increase of 5.6% on a Y-O-Y basis. The historical fully franked dividend yield stands at 6.3%. If we analyze the investment portfolio performance for three years WAX portfolio has provided a return of 16.90% p.a. as compared to the “ASX all ordinaries accumulation index” which has given a return of 9.5% p.a., also over a period of 5 years the portfolio has delivered a return of 18.80% p.a. v/s the 10.30% p.a. provided by the index, thus consistently outperforming the benchmark Index. The total shareholder return for the year was 6.6% & the net tangible assets of the company increased by 11.7%.

Growth Proposition: The strong operating profit is reflective of the solid investment performance of the company over the period. The company’s future performance is dependent upon the company’s Investments. In turn, the performance of these investments is impacted by investee company-specific factors and prevailing industry conditions and other macroeconomic factors. However, considering the fact that its portfolio has beaten continuously the index in terms of returns and has a healthy net tangible asset backing of $1.25 per share as on June 30, 2018, it would be decent enough to predict that it's on a growth trajectory.


 
WAX Investment Portfolio Performance Trends outperforming Index (in $) (Source: Company Reports)
Meanwhile, the stock price has fallen over the past one month by 9.4%, also over the period of past six months the stock has given marginally negative returns of 1.32%; moreover, if we look at the YTD performance, the stock is down by 1.6%, which shows a volatile stock performance. Taking into account the robust Investment Portfolio performance since implementing its revised investment strategy and a better than Industry dividend yield, we recommend a “Speculative Buy” rating on the stock at the current market price of $1.495.


WAX Daily Chart (Source: Thomson Reuters)

Antipodes Global Investment Company Ltd

Decent NTA pre-tax growth since Inception:Antipodes Global Investment Company Ltd (ASX: APL) is a listed investment company which offers investors access to a long-short global securities investment portfolio with a currency overlay. The investment objective of the company is to provide capital growth and income by investing in a concentrated portfolio, primarily involving long and short positions in global listed securities, that will be actively managed with a focus on capital preservation, and achieve returns in excess of the benchmark i.e., MSCI All Country World Net Index in AUD, with reduced levels of risk over a full investment cycle  of typically 3 to 5 years. Recently, the company disclosed weekly Net Tangible Asset backing (NTA) per share after tax that came at $1.144 as at 2 November 2018. On the other hand, NTA pre-tax grew by 7.2% and amounted to $1.145 as at November 02, 2018 from October 31, 2016 where it stood at $1.0680 per share.

On the other hand, the company posted decent numbers for FY18 with 26.8% increase in the Profit after tax at $34.02 Mn compared to $26.83 Mn in FY17. Net assets increased by 31.9% to $459 Mn in FY18 compared to $348 Mn in the prior year. This growth in net assets has been achieved through a combination of positive returns in the investment portfolio, and inflows from the continued exercise of options during the same period. Based on decent growth in FY18, the Board of Directors declared its first dividend of 5.0 cents per share, franked as to 50% with payment date set on 31 October 2018. The annual dividend yield of the company is about 5%. Valuation-wise APL looks impressive with Net Margin at 63.7% in FY18 compared to 62.9% in FY17. Return to the shareholders has also been good with ROE coming in at 8.4%.


Decent NTA pre-tax growth since Inception (Source: Company Reports)

Meanwhile, the stock has generated a negative YTD return of 12.60% and briefly moved above its crucial support level of $1.052. On Daily chart basis, the stock seems to be moving higher from current level. Besides this, healthy portfolio management with strong returns and maximizing the return of shareholders would continue to move the stock higher. Hence, we maintain our “Speculative Buy” recommendation on the stock at the current market price of $1.120.


APL Daily Chart (Source: Thomson Reuters)
 

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.