With the dust long since settled on reporting season, it's a good chance to review which companies were successful in growing earnings for shareholders and dishing out those earnings in the form of dividends.
One of the clear standouts for the period was energy producer Santos Ltd (ASX: STO). Strong first-half oil and gas prices and the early start-up of the PNG LNG joint venture drove sales revenue up by 25% and operating cash-flow by 18%.
The big cash inflow allowed Santos to increase its dividend to shareholders by 5 cents per share (cps), or 33%, to 20cps. Santos' cashflows are expected to continue to increase in the coming year, so it is likely that this dividend is not only sustainable, but will continue to grow.
Also rewarded were investors in Australia and New Zealand Banking Group (ASX: ANZ). A 15% increase in statutory profit allowed the company to bump up its interim dividend by 14%. That put ANZ's total 12-month dividend payment at 174cps. At the current share price this represents a dividend yield of 5.66%.
Consumer finance company FlexiGroup Limited (ASX: FXL) had a strong full year result growing Net profit After Tax (NPAT) 18% and sharing the love with investors, adding 1 cps or 13% to the final dividend. Flexigroup is forecasting growth in cash NPAT of up to 7% in FY15, suggesting the dividend is sustainable.
| Company | Dividend last year (cps) | Dividend this year (cps) | Percent change (%) | Type |
| Santos Ltd (ASX: STO) | 15 | 20 | 33% | Interim |
| Australia and New Zealand Banking Group (ASX: ANZ) | 73 | 83 | 14% | Interim |
| FlexiGroup Limited (ASX: FXL) | 7.5 | 8.5 | 13% | Final |
| ResMed Inc. (CHESS) (ASX: RMD) | (USD) 25 | (USD) 28 | 12% | 4Q |
| IOOF Holdings Limited (ASX: IFL) | 22.5 | 25 | 11% | Final |
Source: Company ASX releases
Breathing apparatus manufacturer ResMed Inc. (CHESS) (ASX: RMD) and financial services company IOOF Holdings Limited (ASX: IFL) both grew their recent dividends by over 10%, reflecting strong performance for their fourth-quarter and full-year results respectively.
Although these five companies each rewarded investors with healthy dividend increases, how a dividend is grown is usually far more important than how big the increase is. Before rushing out to buy, be sure to understand how the dividend growth has been achieved and if the success is likely to continue.
