We are heading towards the end of August which means that a new month is soon ahead of us.
In the past few weeks, we have seen many companies reported their quarterly earnings and it was a good time for us as investors to relook into the fundamentals of their business to see how they were doing and where they are heading over the next few quarters.
If there is any one thing that stands out, a proposed increase in dividend is likely a better sentiments towards encouraging results and the outlook ahead. It also signals that the company is recognizing and rewarding shareholders for their long term belief in the company.
In this article, I’ll share the 3 stocks that increase their proposed dividends after announcing the latest earnings.
Micro-Mechanics announced its Q4 and full year earnings on the weekend which beats expectations.
The leading manufacturer for high precision tools and parts used in process-critical applications for the semiconductor industry delivered a stellar performance for the year ending 30 June 2021 (FY2021) by reporting a 14.8% growth in topline revenue year on year to $73.7m and 23.3% growth in net profit to $18.1m.
This is also the highest ever quarterly results performance the company has ever reported in terms of both sales revenue and net profit so it does look like the company is in a good stead to break that record going forward.
With a record year, the Group is also rewarding its shareholders well with a bump up increase in proposing a final dividend of 6 cents per share and a special dividend of 2 cents per share. This raises the Group total dividend payout for FY2021 to be at 14 cents per share (increase from the previous year of 12 cents per share in FY2020).
Based on the guided outlook, you can see just how confident the management sounded and I think they are poised to benefit from the multi-year semi-conductor growth outlook ahead.
“The Group believes the semi-conductor industry is poised for a prolonged period of solid growth as chips become increasingly embedded in almost every aspect of modern life.”
Ping An had quite a disappointing year falling by as much as 33% year to date as compared to the benchmark of the SZH and HSI index.
Last Thursday, they reported their half year results ending 30 June 2021 which gives investors some comfort in contrast to the recent falling price action.
Predominantly in the traditional insurance industry, Ping An has stepped up to actively respond to the China’s 14th Five-Year Plan by transitioning its business model to be a “Finance + Technology” in order to serve their customers better in their entire eco-system.
In this quarterly earnings, Ping An achieved a 21% annualized operating ROE, with operating profit attributable to shareholder up 10.1% year on year to RMB 81.8m for the 1H of 2021. As a result of this, management has proposed an increase in the interim dividend of RMB 0.88 per share, which is up 10% year on year.
The one thing which investors might want to also take note is that their retail customers and technology patent applications have also increased year on year so investors with a patient mindset will be well rewarded in due time.
” Ping An Life advanced the transformation toward high-quality teams and tiered, refined management, promoting 1 standard + 3 tiers + 4 tools – vigorously developing Diamond Agents. By doing so, the life agent’s channel per capita productivity steadily increased. Annualized operating ROE for the Life & Health is at 35% and the company believes it will pay off with healthy growth and development within the next decade.”
Memory Chip maker Micron Technology has not had an active dividend policy until the last recent earnings when they announced a quarterly dividend.
The payout is small at only the proposed $0.10 per share, but this could work to grow at a decent level over the longer run who is looking for some income play in this sector. At the current price, this works out to be at only ~ 0.5% annualized yield ($0.10 x 4), which will cost Micron around $450m in dividend payout.
This is a reasonable amount of payout given that this will be paid from the free cash flow they are generating.
In the recent earnings, the company grew its free cash flow to $1.5b and the strong 5G demand drives the higher DRAM and NAND, both for smartphone and data centres.
In the call, CFO David said that the dividend policy is a good start to reward shareholders and they will grow over time, while maintaining their flexibility and preference over a buyback strategy which creates longer term value for shareholders.
“We’re still seeing robust demand in cloud. As we migrate through this year and into next year with CPU architectures, we’d also expect good content improvement in cloud.”