Two companies recently hit new highs following good results in August's reporting season- Suncorp Group Ltd (ASX: SUN) and Westfield Corp (ASX: WFD). Their prospects over the coming year or two also look promising, so I believe there is more room for these stocks to run.
— Suncorp Group Ltd was in the news regarding informal talks it had with Bank of Queensland Limited (ASX: BOQ) earlier this year about a possible tie-up of the two companies. Suncorp is one of the nation's leading general insurers. There had been market speculation previously that selling its banking division may be a good opportunity to take advantage of its improved value, but Suncorp is content with growing it more.
The banking division has improved over the past year as it sold off its bad loan book previously. With the housing market growing, its bank wants to increase its loan book, yet is lending on conservative loan ratios to keep it under control.
FY 2014 full year net profits were up and the company raised its full year dividend 40% to 105 cents a share in part thanks to a special dividend.
The stock is offering a hefty 5.7% dividend yield. It is becoming a popular stock because of its steady dividends and its track record for returning capital to shareholders through special dividends.
— Westfield Corp, which came from the restructuring between the Westfield Group and Westfield Retail Trust, hit a new 52-week high this week of $7.81. Since the restructure, it is up about 8%. The stapled security has a 4.1% yield unfranked.
This security is connected to the trust which owns and manages the Westfield Shopping Centres outside of Australia. In the half year ending 30 June 2014, Westfield Corp had a 5.3% increase in comparable net operating income. It reported it had US$2.6 billion in projects under construction. Its Westfield World Trade Center in New York, is expected to open in late 2015 and is currently 70% leased.
For investors who want exposure to improving overseas markets, Westfield Corp could be one way. The US markets have recovered from the GFC, Europe seems to be on the mend and the UK property market is on the rise.
At this time, Suncorp Group is probably a better option for income investors. The insurance industry is improving in general and Suncorp is going through a simplification program to cut costs and improve margins. Also, the company has stated it intends to return surplus capital to shareholders when possible, so there may further special dividends in the future.
There is one more company with impressive results recently that looks to be on a clearer pathway of future earnings growth than these two stocks. Combined with a reliable growth record, this small-cap stock was dubbed The Motley Fool's Top Stock of 2014-2015.
The Motley Fool's top analyst team has written a free report which it's sharing with all interested investors.
If this is you, simply click on the link below and enter your email address – it takes less than 30 seconds – and will be sent to you completely FREE!
