Do you have money to invest for dividends? Here are 2 ASX stocks that could be bought
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The two ASX dividend stocks in this article offer relatively high income yields and increase profits.
Companies that produce both earnings growth and increased dividends may be of interest to income-seeking investors.
Propel Funeral Partners Ltd (ASX: PFP)
In FY21, Propel is expected to pay a gross dividend yield of almost 5% according to Commsec.
Propel is the second largest funeral provider in Australia and New Zealand. It has a significant market share in regional markets and is growing steadily in large cities, largely through acquisitions.
There is a long term tailwind behind Propel. According to the ABS, the volumes of deaths in Austrlaia are expected to increase by 2.7% per year from 2019 to 2030, then by 2% per year from 2030 to 2050.
In 2020, Propel had claimed a market share of around 7%. He continues to focus on his investment strategy to find more assets and infrastructure with the Death Market. He is also looking to explore other potential acquisitions.
Propel said recent trading indicates death volumes may start to revert to long-term trends with comparable positive funeral volume growth over the three months to mid-February 2021.
The HY21 result saw the ASX dividend share continue to grow. Revenue increased 3.5% to $ 59 million, operating income before interest, taxes, depreciation and amortization (EBITDA) increased 14.8% to $ 19 million, net operating income after tax (NPAT) rose 7.6% to $ 8.4 million and operating profit per share (EPS) rose 7% to 8.5 cents.
This earnings growth funded a 50% increase in the interim dividend to 6 cents per share. This represented a payout ratio of 82% of distributable earnings, leaving some for reinvestment.
In fiscal year 21, Adairs is expected to pay a gross dividend of 8% according to Commsec’s forecasts.
The housewares and furnishings industry has rapidly increased its profits during these strange COVID-19 times.
He focused on ensuring a strong gross profit margin during this time of high demand for home renovations. In the first six months of fiscal 21, the gross profit margin of the Adairs group improved by 545 basis points to 66.1%. Mocka margin increased 230 basis points to 53.4% and Adairs gross margin improved 690 basis points to 67.8%. It benefited from coordinated sourcing and retail pricing initiatives, as well as reduced markdown depth and 29 fewer days of promotion across the store.
Adairs also benefits from operational leverage. The half-year result saw the cost of doing business ratio fall by 791 basis points to 35.8% thanks to tight cost control.
The ASX dividend share is focused on an omnidirectional strategy. This means he wants to serve the customer in the sales channel they want, not just in retail stores. It works. Online sales accounted for over a third of total sales and the past 12 months to December 2020 posted online sales of $ 180.2 million. Linen Lover’s membership now exceeds over 900,000 members.
While profitability is increasing across the entire business, the online contribution margin is particularly strong at 44.6%, compared to 36.1% for stores. There is a higher gross profit margin with online. The absolute cost of fulfilling each online order is lower due to process and productivity improvements, as well as lower delivery costs. Online has a better return on investment (ROI) on marketing despite the increase in expenses. Management believes that economies of scale continue to benefit from economies of scale in this channel.
In the first seven weeks of the second half of FY21, Adairs saw group sales growth of 25%.