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Growth Stocks with Dividend Yield over 5%

Oct 17, 2015 | Team Kalkine
Growth Stocks with Dividend Yield over 5%

WAM Capital Limited



Investment portfolio performance continues to beat benchmark index: WAM Capital Limited (ASX: WAM) investment portfolio rose 17.9% since inception as of Sep 30, 2015 beating the benchmark S&P/ASX All Ordinaries Accumulation Index which increased by 7.7% during the same period. On the other hand, the group reported an operating profit before tax decrease to $71.2 million in FY15, from $90.5 million in FY14, as the capital base increased from 2014, while the value of the investment portfolio was also changed. But, WAM delivered a 7.7% yoy better fully franked dividends to 14 cents during the year, against prior corresponding period (pcp). The group’s shareholder equity improved by 35.3% yoy to $806.5 million driven by investment performance and capital management efforts. WAM Capital share purchase plan and oversubscribed placement raised over $193.4 million. The group has major investments in Finance, Consumer and Industrials.


Diversified portfolio (Source: Company Reports)
 
Stock Performance: WAM stock delivered 1.49% during this year to date (as of Oct 16, 2015 close) but increased over 5.67% in the last three months. WAM investment portfolio generated a 1.6% returns during the September month, as compared to the S&P/ASX All Ordinaries Accumulation Index decline of 2.5%. In fact, WAM investment portfolio outperformed the S&P/ASX All Ordinaries Accumulation by 17.3% in the last six months. Moreover, the group has an outstanding dividend yield of 6.83% and trading at an attractive P/E of 14.34x. The company stated that despite market volatility and poor performance in equities, WAM will be in a position to preserve capital. We believe the stock has the potential to improve in the coming months, and accordingly recommend a “BUY” at the current price of $2.05.


WAM Daily Chart (Source: Thomson Reuters)
 

IOOF Holdings



Solid earnings performance: IOOF Holdings Limited (ASX: IFL) has recently approached HUB24 to acquire its entire shares. Primarily, IFL has offered an indicative, non-binding and conditional proposal to acquire 100% of HUB24’s shares for cash consideration of $2.75 per HUB24 share. However, HUB24 has informed IFL about the inadequacy of the proposal and expressed their intention of no further action on the offer. This effort comes at the back of IFL having growth driven through acquisitions through which it has reported a 19% yoy increase that reached $1.7 billion net fund inflow in FY15. EPS increased 13% yoy to 59.9 cps. Shadforth integration has generated over $13 million in pre-tax synergies in FY15 and is on track to deliver $20 million by FY16. The group lowered exposure to volatile institutional funds flow by divesting Perennial businesses. The shares of IFL fell over 10% in the last six months, partly impacted by allegations on the company. On the other hand, the group recently reported its rejection on the claim that it breached its continuous disclosure obligations or was involved in misleading conducts. IFL shares have rose over 3% in the last three months and we believe that its positive momentum would continue, given its attractive valuations. IOOF has a strong dividend yield of 5.93%. We give a “BUY” recommendation for the stock at the current price of $8.94.


IFL Daily Chart (Source: Thomson Reuters)
 

Asaleo Care



Enhanced Tissue and Personal Care business: Asaleo Care Ltd. (ASX: AHY) reported a net profit after tax increase of 15.2% yoy to $32.5 million in fiscal year of 2015 while EBIT rose by 11.8% yoy to $51 million. In spite of the high level of competition for the group’s Tissue and Personal Care segments, AHY Tissue EBITDA improved 15.3% yoy, driven by better Consumer Tissue business, while higher margin core brands sales rose 4.3% yoy during the period. Asaleo Care won new contracts for its Professional Hygiene segment and the segment improved its revenue mix at the back of a better proportion of Tork proprietary products. Meanwhile, Personal Care business EBITDA surged 3.1% yoy during the period, while TENA and Libra continued to maintain their leadership in Incontinence Care and Feminine Care industries. Asaleo is enhancing marketing capabilities for its core brands like Sorbent’s ‘Small detail, big difference’, TENA’s ‘The Beauty of Normal’ and Libra’s ‘Live Fearless’. The group is also targeting online business in Australia through TENA and Treasures.

 
Asaleo Care FY15 EBITDA split (Source: Company Reports)

Stock Performance: Asaleo Care delivered a year to date returns of over 5.33% (as of Oct 16, 2015). The group is on track to generate a single digit growth in EBITDA & NPAT during FY15, in spite of pressure from US dollar currency. The group is also performing a market buyback of up to 10% of issued capital (up to $100million) for 12 months since fourth quarter of 2015. Asaleo Care also has a decent dividend yield of 5.28%. We give a “BUY” recommendation to the stock at the current price of $1.78.
 
 
AHY Daily Chart (Source: Thomson Reuters)

Seymour Whyte



Solid order book: Seymour Whyte Ltd (ASX: SWL) reported a revenue decline to $269.8 million in fiscal year of 2015 as compared to $311.0 million in FY14 due to tough conditions in engineering and construction industry . On the other hand, the group EBITDA margin improved to 6.4% from 5.7% in FY14, due to better project margins and accordingly its NPAT margin rose to 3.7% against 3.5% in pcp. But the group’s EPS fell by 15.7% yoy to 11.3 cents per share at the back of full-year impact of the shares issued for the utilities acquisition in FY14. Seymour Whyte solid market presence across transport and utilities infrastructure segments opened opportunities to build projects in diverse sectors and locations. The group delivered a forward order book rise of 60% as of July 2015 to $335 million as compared to the pcp and has a pipeline of $278 million for fiscal year of 2016. The group has a decent balance sheet position to support its future projects. Moreover, Seymour Whyte is well positioned to leverage the improving infrastructure opportunity for the coming years boosted from Federal Government and Victorian as well as New South Wales Governments. SWL has also announced the award of $59 million Narellan Road upgrade contract by Roads and Maritime Services which will help the company to deliver NSW growth strategy.


Revenue by Client type (Source: Company Reports)

Seymour Whyte shares fell over 19.88% (as of Oct 16, 2015) during this year to date owing to challenging market conditions and poor FY15 performance. We view this correction as an entry opportunity to the stock given its reasonable P/E of 11.42x and solid annual dividend yield of 6.2%. We give a “BUY” recommendation to the stock at the current price of $1.29.


SWL Daily Chart (Source: Thomson Reuters)

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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.
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Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.


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