From the ASX listed companies, two stocks are witnessing a turn around. With both being high dividend stocks, these can be considered for passive income.
HomeCo Daily Needs REIT (ASX: HDN)
HomeCo Daily Needs REIT (ASX: HDN) recently reported a strong performance for the December 2024 quarter and FY24. The portfolio recorded a $131 million valuation gain, representing a ~3% increase from June 2024, driven by a $79 million net revaluation gain and $53 million of capital expenditure. This positive trend reflects strong net operating income growth and the stabilisation of cap rates. HDN maintained a healthy balance sheet with gearing at the midpoint of its target range (30-40%). It is among high quality dividend paying stocks, as for the December quarter, the distribution was declared at 2.125 cents per unit, and the full-year guidance for FY25 was reaffirmed at 8.5 cents per unit for the distribution and 8.8 cents per unit for funds from operations (FFO).
The company’s operational performance remains robust, supported by a well-positioned portfolio primarily focused on daily needs retail assets in metropolitan areas. HDN continues to experience stable performance with over 99% occupancy and rent collection since its IPO, along with consistent growth in comparable property net operating income (NOI) at +4.0%. Furthermore, re-leasing spreads remained positive at +6.0%, with low incentives. The focus on tenant-demand led developments has been a key driver, with a development pipeline valued at over $700 million. This strategy is expected to continue enhancing the portfolio's resilience and income stability.
In FY24, HDN also executed over $420 million in asset sales, in line with book values, reinvesting proceeds into strategic acquisitions of high-quality daily needs assets. These acquisitions improve the portfolio's composition and increase income security in the long term. The company’s development pipeline remains strong, with over $70 million of tenant-demand led projects completed and an additional $85 million of projects commenced, all fully pre-committed. Looking ahead, HDN’s land bank offers significant growth potential, with plans for further development starts in FY25, aiming to deliver attractive returns with low risk.
Endeavour Group Limited (ASX: EDV)
Endeavour Group Limited (ASX: EDV) reported stable Q1 FY25 trading despite ongoing cost-of-living pressures. The Group’s diversified portfolio proved its value, with 2.5% sales growth in Hotels offsetting flat Retail sales compared to the prior year. Hotels performance was a highlight, delivering growth across key segments: food, bar, gaming, and accommodation. Comparable hotel sales rose 2.9%, driven by increased social occasion traffic during events like Father’s Day and footy finals. Queensland led growth in gaming, while the Group regained market share in Victoria following industry-wide trading hour adjustments. Customer satisfaction in Hotels improved to 8.9/10, supported by the successful rollout of the pub+ app, which attracted over 211,000 registered users.
Retail faced headwinds from rising promotional intensity and consumer downtrading, leading to a softer sales mix and profitability pressures. Combined sales for Dan Murphy’s and BWS were $2,466 million, flat year-over-year, with comparable store sales down 1.1%. My Dan’s loyalty program expanded to 5.5 million members, contributing to personalized offers that achieved 24% higher sales. Online sales grew 6.3%, representing 9.3% of total Retail sales, driven by partnerships with Milkrun, DoorDash, and Menulog, and innovations like BWS's app-based "Appy Deals," which drove app user growth. To combat cost pressures, Endeavour continued its endeavourGO optimization program, which delivered $100 million in FY24 savings. Initiatives such as activity-based rostering, inventory management, and consolidation of digital and marketing teams under endeavourX aim to enhance efficiency. Capital expenditure remains disciplined, with FY25 guidance of $450–$500 million, supporting strategic initiatives like the One Endeavour program.
Heading into Q2 FY25, the Group is well-positioned for key trading periods, including Black Friday, Christmas, and New Year’s celebrations. Hotels reported encouraging October momentum, with Christmas bookings already at 54% capacity. However, Retail faces challenges from elevated promotional activity and macroeconomic uncertainty, compounded by cycling 3% growth in Q2 FY24. One of the good quality dividend stocks with a 5.14% dividend yield, a defensive portfolio, and strong cash generation, Endeavour remains well-equipped to navigate headwinds. Its market-leading positions in drinks retail and hospitality, alongside ongoing operational improvements, underpin its ability to deliver long-term shareholder value.
Source: Company’s Report
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