4 Big Dividend Stocks – Australia and New Zealand Banking Group, Suncorp, G8 Education and Myer

Australia and New Zealand Banking Group Ltd

ANZ Details

Settlement with ASIC regarding BBSW case: Australia and New Zealand Banking Group Ltd (ASX: ANZ) made a confidential in-principle agreement with the Australian Securities and Investments Commission (ASIC) to settle the court action relating to Australian interbank BBSW (Bank-Bill Swap Rate) market.ASIC was noted to launch an action against ANZ, NAB and Westpac for allegedly rigging the BBSW, which is a key benchmark interest rate, to increase their profits. The amount is expected to be not exceeding $50 million that the bank had offered earlier.

On the other side, ANZ also sold their 40% stake in the Metrobank Card Corporation (MCC) for US$144 million (A$184 million) in an attempt to focus on core segments. This sale represented an implied P/B multiple of 4.4x, and forecasted post-tax gain on sale of over A$245 million with enhancement in the APRA CET1 capital ratio by 9 basis points in FY18. ANZ has recently appointed the former New Zealand Prime Minister the Rt Hon Sir John Key as their new Chairman effective January 2018. ANZ will be unveiling its annual result this week with a market prediction of earnings of about $7 billion. We maintain a “Buy” recommendation on the stock at the current price of $ 30.54, ahead of its annual results.


ANZ Daily Chart (Source: Thomson Reuters)

Suncorp Group Ltd

SUN Details

Boosting capital position:Suncorp Group Ltd (ASX: SUN) is issuing a new perpetual, subordinated, convertible, unsecured security, Capital Notes 2, to raise $250 million. The group intends to use these proceeds for their capital needs of one or more regulated entities within their group and for general corporate and funding purposes, including the partial refinancing of CPS2 through the Reinvestment Offer. Meanwhile, for FY17, Suncorp Group delivered a top line rise of 3.6% while NPAT surged 4.0% on a year on year (yoy) basis. The group’s cash earnings enhanced 5.1% while their dividends rose 7.4%. For their insurance Australia segment, the general insurance reported an overall Gross Written Premium of $8.1 billion while overall in-force premium was $806 million. Banking & Wealth has overall lending assets of $55.3 billion. The group built $97 billion of assets and over 9 million customers.


Australian insurance portfolio (Source: Company reports)

SUN is now combining Customer Platforms, Customer Experience and Strategic Innovation functions into a single function named Customer Marketplace. The group has appointed Pip Marlow as the CEO for this new function. SUN stock rallied over 7.6% in the last four weeks (as of October 20, 2017) and we believe this bullish momentum to continue. Trading at a decent dividend yield, we give a “Hold” recommendation on the stock at the current price of $ 13.65


SUN Daily Chart (Source: Thomson Reuters)

G8 Education Ltd

GEM Details

Expanding penetration: G8 Education Ltd (ASX: GEM) continues to expand their penetration, and accordingly has inked contracts for acquiring a portfolio of 19 current early education and childcare centers from a single vendor in September 2017. The overall purchase price for the 19 centers was said to be $27.0 million, which is 3.75 times multiple of purchased EBIT of $7.2m. The group is funding this acquisition from their current cash and finance reserves. The group is particularly adding six centers from Queensland, five in New South Wales and eight in Victoria. The group sees these centers to be of high quality which are located in complementary locations. The centers are forecasted to contribute over $1 million in EBIT for the 2017 financial year.The group will start paying dividends on a semi-annual basis from January 2018 in view of a fully franked dividend yield of over 5%.

1H17 Performance (Source: Company Reports)

GEM stock has delivered over 16.5% returns in the last four weeks (as at October 20, 2017) and we believe this momentum will continue. Trading at a decent dividend yield and peaking close to its 52-week high level, we give a “Hold” recommendation on the stock at the current price of $ 4.44


GEM Daily Chart (Source: Thomson Reuters)

Myer Holdings Ltd

MYR Details

New Myer Strategy expected to reap benefits: Myer Holdings Ltd (ASX: MYR) continues to show progress as per their New Myer strategy. The group is constantly adapting to the changing customer habits and preferences, especially related to the digital world. MYR is prioritizing investments in the omni-channel business, in digital and data, while reinforcing the commitment for a better productivity and efficiency. The omni-channel business continues to show solid growth in sales and profit, and the group is constantly making investments to drive innovation.


New Myer Strategy (Source: Company Reports)

MYR is cutting store footprint through store closures and has decreased the footprint at Richlands Distribution Centre in Queensland. The group is focusing on experiential retailing which would be the major driver for traffic in the stores. MYR recently appointed Mr Garry Hounsell as the Chairman of the company.

The group had recently gained a lot of criticism from Solomon Lew, and has now indicated that the New Myer strategy will help the group deliver value to shareholders, as mentioned in letters accompanying the notice of meeting for the AGM on November 24. As per the company, the recent purchase of 500,000 Myer shares reflect the conviction that Myer is on the right track.We recommend a “Hold” on the stock at the current price of $ 0.74


MYR Daily Chart (Source: Thomson Reuters)

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