When the company debuted in 2014, thousands of everyday Australians became shareholders in Medibank Private Ltd (ASX: MPL), Australia's largest health insurer. Many more investigate the company with a view to earning reliable dividends – and that's great, I think Medibank is a solid dividend prospect.
It's just that at today's prices, its 4% yield is starting to look a little slim. Here are 2 companies that could be a viable alternative:
BWP Trust (ASX: BWP) – yields 5.8% unfranked
BWP Trust owns properties that are leased to Bunnings Warehouse, owned by Wesfarmers Ltd (ASX: WES). The property portfolio has attractive metrics, with gearing (debt) of 21% and a weighted average lease expiry (WALE) of 5.5 years. The Trust is trading at a modest premium to its net tangible assets (NTA) of $2.60 per share, but in this sense, it looks like one of the cheaper property trusts out there now.
There is some uncertainty regarding the likelihood of leases being re-signed after the 5-year period. Tenant Bunnings intends to vacate a small number of properties so it can relocate into stores that it recently bought from Masters Hardware. However by and large, BWP appears an attractive income idea and is worthy of further investigation.
Genesis Energy Ltd (ASX: GNE) – yields 8.3% unfranked
Genesis Energy is a New Zealand utility that operates a mix of hydro and thermal power generation assets, as well as owning an oil and gas business. While profits that fluctuate according to the weather are not ideal, the business generates strong free cash flow. An organisational restructure has been reducing customer churn, and increasing the amount of self-service transactions that customers can perform (lowering costs and improving customer satisfaction).
Management continues to expect to reduce costs and customer churn, as well as potentially growing new customer connections and its market share in the LPG segment. Genesis has gearing of 35.6% which is not unreasonable, and the dividend speaks for itself. I think it is worth a closer look from income-seeking investors.
