Are these four fully franked dividend-paying stocks worth a punt?

Telstra Corporation Ltd

TLS Details
Reconfirmed FY17 guidance: Telstra Corporation Ltd (ASX: TLS) has reported the total income rise of 2.2% to $13.7 billion in the 1H 2017 while EBITDA enhanced 2.4% to $5.4 billion. TLS has added 200,000 domestic retail mobile services, 90,000 retail fixed broadband customers, 124,000 bundles, 292,000 nbn connections and 322,000 Telstra TV devices. The underlying core fixed costs got reduced by 2.6% or $92 million. TLS has also returned $1.5 billion to shareholders via share buy-backs. 

1H 17 Financial Performance (Source: Company Reports)
 
On the other hand, TLS has reconfirmed FY17 guidance of mid to high-single digit income growth and low to mid-single digit EBITDA growth, which remains a concern. Despite a free cash flow forecast in the range of $3.5-4 billion, capital expenditure is expected to be over 18% of sales. TLS stock has fallen 8.68% in the last six months as on February 21, 2017, and the pressure might continue. Given the prospects, we maintain an “Expensive” recommendation on the stock at the current price of – $ 4.85


TLS Daily Chart (Source: Thomson Reuters) 

Diversified United Investment Ltd

DUI Details
Weak revenue and profit in 1H 2017: Diversified United Investment Ltd (ASX: DUI) has reported for 1.2% growth in the revenue from the ordinary activities of $19.5 million during the first half of 2017 against prior corresponding period. The profit after tax and before net realized and unrealized gains and losses on the investment portfolio was $16.4 million, which grew 0.4% from the prior corresponding period. However, excluding the special dividends received, revenue fell 7.3% and profit after tax fell 9.7% during the period. Moreover, the net tangible asset backing per share based on the market valuation of investments was $3.82 as at December 31, 2016, against $3.59 at the end of the prior corresponding period, which is a rise of 6.4%. Meanwhile, DUI stock has risen over 13.58% in the last one year as on February 21, 2017 and is trading close to its 52-week high price. We believe that investors holding the stock can take profits. We believe that the stock is “Expensive” at the current price of – $ 3.67

 
DUI Daily Chart (Source: Thomson Reuters) 

TFS Corporation Ltd

TFC Details
Ten-year contract with FPC: TFS Corporation Ltd (ASX: TFC) has executed a ten-year contract with the West Australian Forest Products Commission (FPC) for the supply of Australian sandalwood (santalum spicatum). TFC’s subsidiary, Mount Romance Australia had acquired santalum spicatum from the FPC since 1999. TFC stock is trading at a reasonable level. TFC had earlier reported that its FY16 cash EBITDA was $62.2 million, up 8% on FY15 while cash revenue of $175.5 million was up 16%. However, reduction in non-cash revenue driven by foreign currency movements led to Net Profit After Tax of $90.1 million, which was lower than FY15. The group now expects a step-up change and has forecasted its FY17 adjusted cash EBITDA growth of at least 25%. We give a “Speculative Buy” recommendation on the stock at the current price of – $ 1.51

 
TFC Daily Chart (Source: Thomson Reuters) 

Woolworths Ltd

WOW Details
Mixed Result: Woolworths Ltd.’s (ASX: WOW) stock surged 4.4% on February 22, 2017, at the back of a mixed first half 2017 result. HY17 sales growth in Australian Food was of the order of 2.8% against 1.9% in HY16 while there has been a 16.7% drop in NPAT from Continuing Operations ($785.7 million) and basic EPS from Continuing Operations slipped 18.0%. The group has also cut down the dividend by 22.7%. 

Half year 2017 Results (Source: Company Reports)
 
The group EBIT from significant items has been down 13.6% from HY16. However, the group’s like for like sales have grown faster than that of Coles for the first time in eight years. Further, partnership with BP including sale of Fuel business, has been a strong move wherein proceeds are to be used predominantly to strengthen the balance sheet. WOW has also completed the closure of Masters stores with over 1,600 team members redeployed elsewhere. We maintain a “Buy” at the current price of - $ 26.63

 
WOW 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 currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.