Property companies shine in share returns

Western Australia’s top dividend payers are the producers, providing goods and services, as opposed to those paying shareholders off on soaring share prices fuelled by rising commodity prices.

The property and finance companies have done particularly well when comparing dividends paid over the 12 months to June 30, 2005, and dividend yields (dividend per share divided by the share price) based on latest annual results.

Top property performers include Port Bouvard, Bunnings Warehouse Property Trust, Cedar Woods Properties, Flexi Property Trust, United Overseas Australia and Westralia Property Trust.

By far the best performer among the properties was Port Bouvard, which recently sold its marina, 18-hole international golf course, residential estate and associated assets near Mandurah, south of Perth, for $26.12 million.  The company paid dividends of 25 cents for the year for a high dividend yield of 12.4 per cent.

The Bunnings Warehouse Property Trust, which has a string of properties throughout Australia and New Zealand, mostly leased to Bunnings, paid 11.7 cents in dividends for a yield of 6.8 per cent. It expects to develop eight to 12 new stores a year.

Other strong property performers were Flexi Property Trust, United Overseas Australia and Westralia Property Trust, all with high dividend yields of 8.8 per cent, 8.7 per cent and 8.3 per cent respectively.  The financial sector is represented at the top end by diversified stock brokers and finance houses Euroz and JDV, who both benefited from the current resources and trickle down industrial boom, with Euroz paying an impressive 14.5 cents dividend for a high 17.1 per cent yield.

JDV managed 5.1 cents in dividends for a 6.5 per cent yield, while specialist finance company Alliance Finance, the only independent publicly listed insurance premium funding company in Australia, paid 4.1 cents for a 7.7 per cent yield.

While WA’s resources companies featured prominently in the one, three and five-year return to shareholders based on share price increases, they are largely missing in action among the state’s top dividend paying companies for the June 2005 year.

WA’s best dividend payer – diversified industrial Wesfarmers at $1.45 for the year – is also one of the country’s best performers, with interests in chemical and fertiliser manufacturing, gas processing and distribution, coal mining, building materials, hardware, industrial and safety products and services, rail transport and insurance.

The company posted a nine per cent increase in net profit to $618 million for the year, up from the previous year’s $569 million, a major contributor to which was a 33 per cent jump in energy earnings, largely from increased coal export and liquid petroleum gas prices. The dividend yield, however, was 4.9 per cent (see story below).

Another industrial, Schaffer Corporation, has had to work hard for an impressive $1.30 dividend and high 9.9 per cent dividend yield, with its interests in auto and furniture leather, building products and property investment.

Earlier this year, subsidiary Howe Leather lost its contract to supply BMW in the face of heavily subsidised competition from South Africa, which is expected to cut sales by five to 10 per cent in the current financial year.

The vagaries of dealing in tough, fickle, international markets while still delivering on the bottom line were perhaps best demonstrated in Schaffer’s response to a stock exchange query on the company’s share price fall from $7.45 to $5.02 between April 28 and May 3 this year. The share price has since returned to over $6.

Schaffer cited a slow down in the global auto industry, the reduction of sales to China, increased competition in building products in the eastern states and the adverse effects of a strong Australian dollar.

The difficulties in its operating businesses have been partly offset by proceeds from property sales, which have allowed the company to pay special dividends.

Takeover target Foodland Associated returned a 96 cent dividend for the year and a 5.1 per cent yield as its takeover by Sydney-based grocery wholesaler Metcash Trading and supermarket giant Woolworths rolls towards its October close date.

The bid, worth between $3.28 billion and $3.38 billion, has FAL’s support and will see Woolworths acquire 19 Action stores and three Action sites in Australia, along with FAL’s New Zealand stores, while Metcash will acquire the remaining business for $780 million in cash.

National engineering company Monadelphous Group cashed in on the resources boom, particularly iron ore in WA and coal in Queensland, to post a 95 per cent after tax profit increase to $16.7 million for the June 2005 year, on sales up 77 per cent to $390.6 million.

This was enough for a 60 cent dividend (6.1 per cent yield) prior to a one-for-four share split in June aimed at increasing market liquidity in its stock.

The company maintains a policy of paying special dividends in addition to its established policy of paying 60-70 per cent of after-tax profit as normal dividends.

And it’s looking good. Workload levels are expected to at least continue at current levels this year and “the outlook is strong for the next two to three years”, managing director Rob Velletri said.

The best performing resources company, in terms of dividend payments, at 59 cents for the year, was Woodside Petroleum, Australia’s largest listed pure energy and petroleum company by its market capitalisation of $A22 billion.

Operator of Australia’s largest resource project, North West Shelf natural gas, and others in the US and Africa, Woodside has provided a total shareholder return, based on share price growth over the past year of 79 per cent, 24 per cent over the past five years and 22 per cent over the past 10 years. However, the dividend yield was a relatively low 3.3 per cent.

For Jubilee Mines, the dream continues, with good money from both the share price and dividend payments, underpinned by continuing high grade production from its Cosmos mine, 40km north of Leinster, and a new mine development at nearby Prospero, which has an estimated 60,000 tonnes of contained nickel.

Since the end of last year, the share price has nearly doubled to around $8, dividends have totalled 45 cents for the year, providing an excellent dividend yield of 8.9 per cent.

Other good performers have been the construction and engineering United Group, diversified Avatar Industries, blind maker Kresta Holdings and natural gas seller Alinta.