Two great stocks with dividends and positive ROE

IOOF Holdings Limited

IFL Details
Victorian Supreme Court orders in favor of IFL: IOOF Holdings Limited (ASX: IFL) has announced that Maurice Blackburn Pty Limited (Maurice Blackburn) has agreed to Victorian Supreme Court orders, that prohibited it from proceeding with a proposed class action against IFL on behalf of any person, assisting any other person to do so, and using or disclosing IFL confidential documents to any person. Moreover, IFL reported for continuing positive net flows of $1.8 billion. IFL’s UNPAT in FY 16 is flat at $173.4m against FY 15 while underlying EPS fell 4% to 57.8cps.

 

FY 16 Financial Performance (Source: Company Reports)
 
Additionally, IFL has enhanced their performance from the Shadforth acquisition combined with strong net inflows and is reinvesting in core businesses. Shadforth has posted 7.5cps and realized $25m pre-tax cost synergies. We give a “Hold” recommendation on the stock at the current price of – $ 8.20

 
IFL Daily Chart (Source: Thomson Reuters) 

Challenger Ltd

CGF Details
Two new key annuity relationships: Challenger Ltd (ASX: CGF) has made two new key annuity relationships. One with AMP to provide CGF’s full range of annuity products through AMP’s investment and administration platforms and the other with Mitsui Sumitomo Primary Life Insurance Company Limited (MS Primary). CGF from two years has formed a series of new annuity relationships, with leading financial services organizations. Moreover for 2017, CGF expects the Life’s Normalized Cash Operating Earnings to be at a range of $620 million to $640 million and pre-tax normalized return on equity target of 18%. Additionally, in the September quarter CGF’s total group assets and funds under management grew 3% to $62 billion. The Funds Management has posted positive net flows across both Fidante Partners and Challenger Investment Partners of $0.9 billion for the September quarter. FUM has increased by $2.2 billion for the quarter to $58.9 billion, as a result of the net flows and positive investment markets ($1.3 billion). In addition, the annuity sales grew by 46% on the prior corresponding period (pcp), which includes the strong growth of 21% in term annuities and record quarterly lifetime annuity sales growth of 208%. Further, the Total Life net book grew 3.1% to $334 million, for the September quarter against $129 million in the pcp. CGF stock rose 16.61% in the last six months (as of November 21, 2016) while we give a “Hold” recommendation on the stock at the current price of – $ 10.66
 

CGF Daily Chart (Source: Thomson Reuters)

Disclaimer
 
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