Gaming and wagering business Tabcorp Holdings Limited (ASX: TAH) will pay shareholders a special 30 cent per share dividend after it delivered a strong half-year report this morning, driven by "strong customer acquisition numbers and betting volumes".
For the first half ending 31 December 2014, Tabcorp recognised $122.4 million in statutory net profit after tax (NPAT), representing a 64.1% increase on the prior corresponding period (pcp). While this included a $31.5 million income tax benefit related to its Trackside product, its underlying net profit still rose 21.8% for the half to $90.9 million which is ahead of analysts' expectations, according to Bloomberg.
Meanwhile, revenue rose 6.7% over the period to $1.12 billion driven predominantly by its newly merged wagering and media division, which grew revenues by 7.8% to $960.7 million. Gaming services revenue rose by 1.6% to $50.7 million while revenue fell by 0.6% in Tabcorp's Keno business.
A 10% dividend yield
Tabcorp also made itself more appealing in a low interest rate environment by announcing a $230 million, or 30 cents per share special dividend (fully franked), which it will pay in addition to its 10 cent fully franked interim dividend. The shares entered into a trading halt this morning pending a $236 million renounceable rights issue to fund the once-off dividend, which will enable it to return excess franking credits to shareholders whilst also maintaining its balance sheet strength.
While the company's final dividend has typically been slightly lower than its interim dividend, Tabcorp shareholders could still be looking at a total dividend return of around 10% fully franked in the 2015 financial year.
