Three High Dividend Stocks ASX
When there is increased uncertainty and market volatility, high dividend stocks ASX represent an important price signal for investors. Under the Radar Report gives investors three high dividend stocks ASX.
Why are high dividend stocks ASX important in 2020?
High dividend stocks ASX in 2020 are at risk as companies err on the side of caution. Under the Radar Report analysis three high dividend stocks ASX that have the ability to pay high dividends ASX in the current highly uncertain economic environment. On any level this is an impressive feat that these stocks ASX can pay high dividends. It’s doubly impressive because with these three high dividend stocks ASX, you are also getting growth potential, largely absent in their bigger counterparts.
High dividend stocks ASX represent an important price signal for ASX investors
High dividend stocks in 2020 send a strong message to ASX investors about future prospects and performance, which demonstrates a company’s financial strength and growth potential. The three high dividend stocks ASX that we analyse below have survived and will come out as strong performers with high dividends. These three high dividend stocks ASX are the quality we look for in an ocean of uncertainty.
Investing in high dividend stocks ASX is key
At Under the Radar Report we don’t just look for high dividend stocks ASX but also for capital growth. You want your investment to appreciate over time and this can be avoided by investing in high dividend stocks ASX. Many investors will go straight to investing in ASX Blue Chip stocks for dividends. However, it’s much easier for a small company to double or triple in size than it is for a big company to grow 5% or 10%. This is why the three high dividend stocks ASX that we analyse are all Small Caps.
The volatility of the market shows how important it is to own high dividend stocks ASX whose returns are not simply reliant on dividends. Having more than doubled in the decade following the financial crisis to climb over 7,000 in late February, the S&P/ ASX All Ords Index dived a third to mid-March, before its powerful rebound. It is now ~14% below its record level.
Paying dividends only makes sense when a company can afford to pay them out of retained earnings and leave enough left to invest in its business. This is what you can see in the performance of the high dividend stocks ASX that we recommended just over a year ago. The portfolio of high dividend stocks ASX has returned 11%, which compares to the -1% return of the S&P/ASX All Ords Accumulation Index.
High dividend stocks ASX: Austal (ASB)
With high dividend stocks ASX it is important that the stock has earnings power to pay its dividend and Austal definitely does having upgraded guidance only a couple of weeks ago by almost 15% for minimum EBIT of $125m.
Our expected final dividend for this high dividend stock ASX of 3 cents will cost ~$11m. The full year dividend is covered around 4-5 times, depending on the applicable tax rate. Since Austal make most of its money in the US, the dividend is unfranked.
This high dividend stock ASX balance sheet is solid gold, with more than $100m net cash and a strong current ratio. The only cloud on the horizon for this high dividend stock ASX is a hiatus in production in the US from 2024, which management has time to rectify. There seems little reason to prevent payment of its final dividend. Dividends can grow, since the payout ratio is so low though new US contracts will be necessary to keep momentum going.
The high dividend stock ASX has a new CEO, current Australasian COO, Patrick Gregg, and has plenty of operating opportunities to deploy its capital. Investing in a shipbuilder which is a highly cyclical industry, comes with capital and development risks, and investors should be careful not to overpay. To uncover whether this high dividend stock ASX is a Buy, Hold or Sell join for free today.
High dividend stocks ASX: Ingenia Communities (INA)
Under the Radar Report have been covering this high dividend stock ASX for seven and a half years and in that time this high dividend stock ASX has been increasing its distributions, but it has also been raising even more capital. A property trust can only grow if it has money to invest. Because of this high dividend stocks ASX innovative capital light model, Ingenia’s return on that capital has exceeded its costs and its shares have steadily risen as well. Fast forward to today and a company whose market cap was a couple of hundred million is now $1.4bn and it’s a member of the S&P/ASX200 property trust index.
Although this high dividend stock ASX has a slender yield, it was one of the few in its sector to raise money during the COVID-19 crisis at a premium to its net tangible assets. As we commented last week, following its latest $175m equity capital raising at $3.50 a share the trust is back on the acquisition bandwagon. To uncover whether this high dividend stock ASX is a Buy, Hold or Sell join for free today.
High dividend stocks ASX: Tassal (TGR)
This high dividend stock ASX is good dividend portfolio candidate at the right price. Under the Radar Report like the company’s domestic food thematic, growth prospects and proven dividend paying ability.
Salmon has held up reasonably well during the coronavirus lockdown with the main weak spot being food services (cafes, cafes, pubs and restaurants). But easing of social distancing measures are seeing these establishments reopen and dine-in options return, which will aid this high dividend stock ASX.
We are encouraged by the progress of the new prawn business with FY20 production guidance recently upgraded from 2,400 tonnes to 2,500 tonnes. This high dividend stock ASX has great growth potential. Production targets are 6,000 tonnes in FY22 and 22,000 tonnes a year in the long-term. But we are wary of the increased risk given the $140m investment for this high dividend stock ASX.
The balance sheet of this high dividend stock ASX has improved after the $126m capital raising with gearing (net debt excluding leases/equity) falling from 20% to 16% at 31 December. We forecast the final dividend for this high dividend stock ASX to be held at 9 cents making 18 cents for FY20 representing a 4.4% yield.
This high dividend stock ASX has been a solid performer, dividend payer and remains a good long-term domestic food growth story. While some parts of the business will have been impacted by coronavirus others will have benefitted and the big opportunity in prawns remains. To uncover whether this high dividend stock ASX is a Buy, Hold or Sell join for free today.