TWO BUY RATED DIVIDEND STOCKS

National Australia Bank Ltd

National Australia Bank Ltd	NAB:ASX
Average volume	7.38m
Shares outstanding	2.63bn
Free float	2.57bn
P/E (TTM)	12.24
Market cap	79.17bn AUD
EPS (TTM)	2.46 AUD
Annual div (IAD)	1.98 AUD
Annual div yield (IAD)	6.57%
Div ex-date	May 15 2015
Div pay-date	Jul 03 2015
Next div ex-date	Nov 05 2015
Next div pay-date	Dec 15 2015

NAB Dividend Details
 
Partnership with Visa adds momentum to Personal Banking: National Australia Bank (ASX: NAB) reported that its Personal Banking delivered solid performance in FY15. The group entered into an exclusive 10-year scheme partnership with Visa to boost future investments in its cards portfolio.
 
Solid efforts to boost Core business performance, enhancing capital position: NAB reported a statutory net profit increase of 22.7% year on year (yoy) to $6.36 billion in fiscal year of 2015, while its cash earnings rose by 15.5% yoy to $5.84 billion. NAB also enhanced its asset quality during the period, wherein its total charge for Bad and Doubtful Debts fell by 5% yoy to $823 million on the back of decrease in Australian Banking and UK Banking. NAB’s Common Equity Tier 1 (CET1) ratio rose by 137 basis points to 10.2% as at 30 September 2015, against March 2015, mainly driven by proceeds from rights issue. National Australia Bank’s intends its CET1 ratio to be in the range of 8.75% to 9.25%, to comply with the APRA regulatory requirements. The group entered into a long term relationship with Nippon Life Insurance, to create life-insurance products as a part of the bank’s initiative to boost its wealth division that has insurance business. Nippon Life Insurance might offer a deal in the range of 200 billion and 300 billion yen or US$2.5 billion, to buy National Australia Bank’s insurance operation, which would further boost NAB’s capital position. Moreover, NAB Wealth division is contacting its customers as a part of its customer response initiative program to enhance its customer’s experience with NAB Wealth as well as rectify any problems in the divisions. Australian Securities and Investments Commission said that NAB need to compensate clients who might have become victims of the bank’s poor advice since 2009. Accordingly, NAB’s wealth division has reported that they finished over $1.7 million in payments to 87 customers since February after resolving their claims for compensation. Meanwhile, NAB Asset Management, nabtrade, and NAB Asset Servicing have joined the ASX mFund Settlement Service, which is an electronic processing service that enables investors to use the ASX broker to apply and redeem units in unlisted managed funds. The bank also hiked the interest rates on its new as well as current variable rate home loans by 0.17% per annum to 5.60% per annum which would be effective from November 12, 2015, to boost its capital position related to residential mortgages in order to comply with the regulatory changes.



National Australia Bank performance (Source: Company Reports)
 
Stock performance:  The shares of National Australia Bank declined over 15.73% (as of Oct 30, 2015) in the last six months partly due to UK operations divestments impact. However, NAB already diverted over a £1.7 billion funds under its conduct mitigation package and improved its asset quality during FY15 by decreasing bad and doubtful assets. NAB is focusing on core business and boosting capital position by offloading non-core assets. The group is further investing over 300 million in NAB Wealth for the next four years and focusing on customer relationships. NAB’s Personal Banking also delivered solid performance in FY15 and future investments will be boosted by the Visa partnership. Meanwhile, the stock recovered a little in the last four weeks and is trading at an attractive valuation with a relatively cheaper P/E of 11.93x and has a decent dividend yield of 6.57%. We maintain our positive stance and reiterate our BUY” recommendation on the stock at the current stock price of  $29.62
 
 

NAB Daily Chart (Source: Thomson Reuters)
 

Flight Centre Travel Group Ltd

 

Flight Centre Travel Group Ltd	FLT:ASX
Average volume	414.63k
Shares outstanding	100.85m
Free float	38.14m
P/E (TTM)	14.93
Market cap	3.83bn AUD
EPS (TTM)	2.54 AUD
Annual div (IAD)	1.52 AUD
Annual div yield (IAD)	4.01%
Div ex-date	Sep 16 2015
Div pay-date	Oct 16 2015

FLT Dividend Details
 
Focusing on TTV growth, better outlook: Flight Centre Travel Group Ltd (ASX: FLT) recently agreed to acquire 51% interest in AVMIN, a Brisbane based firm to enhance its leisure and travel portfolio. This will enable FLT to serve a special clientele base such as VIPs, sport teams etc. while opening the channel to a new revenue stream. The group improved its performance across international markets, wherein UK and Ireland, USA, South Africa and Singapore reported record earnings before interest and tax during fiscal year of 2015 leading to >$100million overseas EBIT for the first time. FLT generated a revenue increase by 6.8% yoy to $2.4 billion for the fiscal year of 2015, boosted by major total transaction value improvement by 9.7% yoy to $17.6 billion. The group expects a decent underlying PBT growth between $380million and $395million for the fiscal year of 2016, which is a modest 4% to 8% growth against the $366.3 million statutory PBT achieved during FY15. Moreover, IATA has projected 4.1% compounding annual growth in passenger numbers globally through to 2034, while Airbus estimates that international traffic serving the Australia South Pacific region is estimated to grow annually at 4.5% to 2033. These seem to boost FLT’s addressable market. Improving leisure travel market and customer enquiries, would offset the short term pressure for FLT. The group is also focusing on the gaps in its online product range by adding Air Asia and Tiger fares to the flightcentre.com.au website, along with additional Jetstar inventory and ancillary products.
 


Five year summary (Source: Company Reports)
 
FLT shares recovered over 5.12% (as of October 30, 2015) in the last four weeks driven by better than estimated full year results. We believe the group is also trading at reasonable P/E of 14.9x and has a dividend yield of around 4%. We maintain “BUY” recommendation to the stock at the current price of  $37.13
 
 

FLT Daily Chart (Source: Thomson Reuters)

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