The stock market just keeps on powering on, higher and higher. Already up 0.4% in morning trade, the S&P/ASX 200 looks headed for yet another positive day.
Source: The Sydney Morning Herald
That would make it nine winning days out of the last ten, and a cumulative gain of over 6%. I hope your portfolios are enjoying the ride.
The strength in the ASX is being driven by companies beating earnings estimates, with many bowing to shareholders' wishes and increasing their dividends. As Invesco Australia portfolio manager Nicole Schuderl told The Age yesterday… "Returning cash to shareholders is likely to remain a major focus as reporting season continues."
Bring it on, I say. Who doesn't like a fully franked dividend?
As if to emphasise the point, Australia's largest independent oil and gas producer Woodside Petroleum (ASX: WPL) has declared a final dividend of US$1.03 (A$1.14), up a WHOPPING 58% over the previous period. Thanks mainly to the commencement of production at its Pluto LNG plant, Woodside has thrown off US$5.9 billion in free cash flow over the past two years, allowing it to pay down debt AND increase dividends.
Not to be outdone, Wesfarmers (ASX: WES), the owner of Coles, Officeworks and Bunnings, amongst other businesses, has lifted its interim dividend 10% to 85 cents, after beating market expectations.
Suncorp (ASX: SUN) has also raised its dividend 40%, despite a fall in profit. The 35 cent interim dividend is equal to the TOTAL dividends paid in 2010 and 2011. In short, it's a DIVIDEND BONANZA.
You may also have seen this list I shared with readers on Saturday. At least 10 blue chips have issued dividend increases in the past few weeks…
CSL Limited +21%
ASX Limited +0.3%
Commonwealth Bank +12%
FlexiGroup +14%
JB Hi-Fi +10%
Rio Tinto +15%
Telstra +4%
REA Group +38%
Carsales.com +16%
Primary Health Care +39%
Yes Foolish readers, billions of dollars' worth of dividends will be rolling into our accounts over the next few months.
"I'm rubbing my hands with glee"
I'm rubbing my hands together with glee, as it will give me some extra cash to deploy back into the market. I've got my eye on some bargains. All sport great dividend yields have great growth prospects. Given each company's growth prospects, and the very real potential of future increases to their dividends, whichever way you look at them, they are likely to beat the pants off the returns on offer from term deposit accounts.
We try not to gloat too much here, happy to let our stock picks to the talking for themselves, but today the Motley Fool Share Advisor team couldn't control themselves, dancing around the office after Seek Limited (ASX: SEK) jumped 15% higher in early morning trade, after reporting excellent results.
Source: The Age
Another 100%+ winner… with potentially more to come
With Seek already up over 97% (including dividends) before today's move, members now have another stock that has doubled since being recommended by the Motley Fool Share Advisor team — making it four stocks in total that have doubled or more since our initial recommendation. We're not sure where the double will come from but we sure know we're enjoying the ride, and trust our thousands of Motley Fool Share Advisor subscribers are too.
Your term deposit is costing you money
Record low interest rates are here to stay, according to RBA Governor Glenn Stevens. As the Reserve Bank of Australia board noted in its February minutes… "…if the economy evolved broadly as expected, the most prudent course would likely be a period of stability in interest rates." In other words, interest rates aren't going up any time soon.
When investors can get a 4 or 5% or even higher return from dividends alone each year, often fully franked, and with those dividends growing each year, investing in quality, high dividend paying stocks seems a no-brainer. I'd be surprised if we see a change in the official cash rate this year, and it's one reason why I won't be leaving my dividend payments sitting in an account earning a lowly 3%.
Dick Smith is one stock that caught me by surprise
One stock I'll be keeping an eye on is consumer electronics retailer Dick Smith Holdings (ASX: DSH). I was negative on the stock prior to its IPO in December 2013, but so far the company has defied my expectations. The retailer has beaten its prospectus forecast earnings, with earnings before interest, tax, depreciation and amortisation (EBITDA) coming in at $41.7 million, against a forecast of $40.2 million for the first half of 2014.
As CEO Nick Aboud said in a statement to the ASX… "A strong focus on sales, gross margin and reducing the cost of doing business drove our strong pro forma operating result." Dick Smith is expanding its range of private label brands, differentiating itself from the likes of JB Hi-Fi (ASX: JBH) and Harvey Norman Holdings (ASX: HVN).
With no debt, new store openings and plans to transform its underperforming New Zealand business, Dick Smith could be one stock to watch.
