The first half earnings season has drawn to a close as the focus now switches back to geopolitical news.
Losing sleeping over how geopolitical uncertainties would impact negatively on your investments in 2H17? It is, perhaps, the right time to rebalance your portfolio with a heavier weightage of dividend stocks, which some might say lacks the thrill and too mundane an investment.
Do not argue against profits and gains! Remember that capital protection is equally important especially when the outlook is cloudy!
In view of this, Phillip Securities has offered three alternatives that are worth the consideration of dividend hunters.
Asian Pay Television Trust – High Yield Remains Intact
Asian Pay Television Trust (APTV) has long been one the highest-yield paying counters in the Singapore Exchange.
In its latest earnings announcements, Phillip Securities noted that APTV’s premium cable digital business is seeing some traction with customers after the Trust introduced promotional content. User subscription rose almost 11 percent in the latest quarter compared to a year ago. Meanwhile, cable TV subscribers remained stable.
On the flip side, its Broadband Average Revenue Per User (ARPU) will likely continue to be on the downtrend as major telecommunication companies like Starhub and M1 have rolled out unlimited 4G data plans. Free cash flow also fell 16.7 percent in the latest quarter and is still lower than dividends payable. As such, APTV is still reliant on high leverage to sustain dividends.
Nonetheless, APTV’s distribution per unit (DPU) was maintained at $0.01625 while the management gave guidance that its DPU will be maintained at $0.065 annually. At the current trading price of $0.575 per unit, APTV still offers a high yield of about 11.3 percent.
Nam Lee Pressed Metals Industries – Still A Stable Yield Play
Unlike other numerous metal players whose products cater to the oil and gas and marine line, Nam Lee Pressed Metals Industries’ (Nam Lee) aluminium products are tailored for the property and construction sector.
Despite posting revenue that fell 2.5 percent to $95.2 million, Nam Lee’s bottom line rose 2.2 percent to $8.1 million in 9M17. Although gross profit fell 11.4 percent to $19.4 million corresponding to lower gross margin of 20.4 percent compared to 22.5 percent last year, profit before tax (PBT) margin rose 3.5 percent year-on-year.
The improvement in PBT margin reflected stronger cost controls in the business which resulted from the hedging of the costs of its raw material. Nam Lee registered higher net foreign exchange gains and net gain in derivative which ultimately lifted its bottom line.
Meanwhile, as of 9M17, Nam Lee is still in a net cash position of $42.5 million, at about 46.9 percent of its market capitalisation of $80.7 million (based on current trading price of $0.38 per share). Assuming dividend is maintained at $0.02 in FY17, Nam Lee’s shares offer an attractive yield of about 5.3 percent.
Coupled with the fact that it is trading at 0.7 times price-to-book value and 9.7 times price-to-earnings, dividend hunters may just find that Nam Lee shares are a steal.
Not all high-yield paying stocks are good stocks, but a company that rewards faithful investors with growing dividends is definitely one sign of a solid business.
For 2Q17, Centurion Corporation (Centurion) saw its revenue jumped 22.8 percent to $35.2 million and net profit increased 2.9 percent to $9 million. The company is supported by favourable supply-demand dynamics and improving economic sentiments in the public construction sector. Workers occupancy remains stable with some assets seeing improved occupancy rates. As a result, Centurion could be seeing prospects of positive near-term rental reversions for some assets.
Assuming FY16 declared dividends of $0.02 per share is maintained in the current FY17, investors can look forward to a yield of about 4 percent. Any positive reversions in rental could be a catalyst for the stock or induce Centurion to initiate another round of increased dividend.