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Some leading ASX dividend stocks have released their results for fiscal year 21, which showed earnings growth as well as much higher dividends.
Reporting season is a useful time to gain insight into a business’s performance. Decisions by a board regarding dividend declarations can potentially provide insight into management’s thinking about the strength and medium-term prospects of the business.
Here are two ASX dividend stocks that just reported a dividend increase:
Poultry company Inghams has announced that for fiscal 21, its annual dividend will be 16.5 cents per share, fully franked. This is an increase of 17.9% over one year. This represented a payout ratio of 71%. It was in line with its policy of paying between 60% and 80% of underlying net profit after tax (NPAT).
The company has experienced both volume growth and operating leverage. The group’s poultry heart volume increased 4.2% to 446.9 kt. Underlying profit before interest, taxes, depreciation and amortization (EBITDA) increased 9.6% to $ 448.7 million, underlying net profit after tax increased 57.4% to 86.7 million dollars and statutory net profit after tax increased 107.7% to 83.3 million dollars.
The ASX dividend stock also managed to reduce its inventory by $ 30 million. There was an excess stock of frozen processed poultry that had accumulated as a result of the effects of COVID-19. The inventory is now in the desired band.
He has been busy making investments to keep growing. Inghams has made progress with its two new hatcheries, with the Victorian facility now operational and WA is expected to start around mid-year 22. In addition, the NZ $ 17 million investment in a new line of Fully baked process in Auckland “is progressing well” and is expected to be completed in the first half of fiscal 22.
Inghams said he expects the consumer recovery to pick up again when vaccination rates rise and current lockdowns are lifted. Volumes are expected to show continued growth with new business across various channels. Feed costs have stabilized.
Citi is pricing ASX dividend stock as a buy, with a price target of $ 4.35. He believes the Inghams share price is valued at 16 times the estimated earnings for fiscal year 22
Adairs was another company with a much bigger dividend. He announced a final dividend of 10 cents per share, bringing the dividend for the year from 21 to 23 cents per share. This was a 109% increase from FY20.
It saw the group’s sales increase 28.5% to $ 499.8 million (with a 33.2% increase in Adairs online sales). Adairs underlying gross margin increased 520 basis points to 66.7%. Underlying earnings before interest and taxes (EBIT) increased 97.3% to $ 109.1 million, statutory net income increased 80.7% to $ 63.7 million, and earnings per share (EPS) jumped 79% to 37.7 cents.
Physical stores are still a big part of the image for Adairs. As a result, it opened four new housewares stores and expanded six stores (four housewares stores and two regular stores). The company said the store expansion strategy continues to generate a strong return on investment. The FY22 pipeline for new and expanded stores is two to four net new stores and plans to expand an additional eight to ten stores. This equates to an increase of 8% or more in the gross leasable area over the next 12 months.
The new national ASX dividend share distribution center is expected to be fully operational by the end of September 2021, which, once transitioned, is expected to result in annual savings of approximately $ 3.5 million per year.
Adairs noted that the restrictions impact sales during FY22. Adairs stores experienced a 27% drop in sales in the first seven weeks of fiscal 22, contributing to an 11.7% drop in total sales (including online sales). Adairs’ online sales grew 12.9% and Mocka’s increased 16.1%.