Investing in high quality dividend paying stocks can be advantageous to investors as such stocks provide a steady income stream besides helping in wealth creation in the long term. Two of the best dividend paying stocks are
McMillan Shakespeare Limited (ASX: MMS)
MMS has demonstrated a strong recovery in its financial performance from 2020 to 2024, marked by notable growth in key metrics such as operating profit, EBITDA, and income before extraordinary items. Revenue has rebounded, reaching AUD 521 million in 2024, up from AUD 493 million in 2020. The company's operating margin improved significantly from 17.5% to 29.9%, reflecting enhanced operational efficiency. Additionally, the EBITDA margin increased from 34.2% to 43.1%, underscoring the company's ability to generate earnings effectively.
The return on average common equity skyrocketed from 0.4% in 2020 to an impressive 65.6% in 2024, showcasing strong returns for shareholders. While the dividend yield has remained attractive, fluctuating between 3.5% and 8.2%, the significant rise in total debt from AUD 288 million in 2020 to AUD 588 million in 2024 requires careful monitoring. Overall, MMS delivered financial trajectory appears positive, reflecting a commitment to growth and shareholder returns amidst increasing leverage.
MMS is one of the best long term dividend stocks having announced a notable increase in its dividends for FY24 compared to FY23, with the interim dividend per share rising from 58.0 cents to 76.0 cents and the final dividend increasing from 66.0 cents to 78.0 cents. This brings the total dividend per share to 154.0 cents, up from 124.0 cents the previous year. Notably, the dividend yield has also increased significantly, from 4.7% in FY21 to 8.1% in FY24.
The projected dividends for 2025 through 2028 indicate a steady rise, with expectations of incremental increases each year. This approach suggests confidence in ongoing profitability and cash flow generation, allowing the company to maintain a sustainable payout ratio while enhancing shareholder returns.
ANZ Group Holdings Limited (ASX: ANZ)
ANZ announced on 7 May 2024, its plan to execute a $2 billion on-market share buy-back as part of its capital management strategy, subject to market conditions and approved by APRA. As of 31 March 2024, ANZ reported Level 1 and Level 2 CET1 capital ratios of 13.4% and 13.5%, respectively, an increase of 16 basis points since September 2023.
ANZ reported strong half-yearly results for the period that ended on 31 March 2024, highlighted by significant milestones and financial performance metrics.
The bank's digital offering, ANZ Plus, showed robust growth, nearing 690,000 customers and accumulating close to $14 billion in deposits by April. Revenue from institutional payment platforms increased by 4%, with international payments growing by 8.5% year-on-year. International business also performed well, recording a notable 16% revenue growth. Despite a slight 1% decline, ANZ achieved a Group Statutory Profit after tax of $3,407 million and a Cash Profit of $3,552 million. The total credit impairment charge for the period was $70 million, resulting in a cumulative impairment balance of $4,046 million as of March 31, 2024. ANZ is among the top quality dividend stocks. It proposed an Interim Dividend of 83 cents per share, partially franked at 65%. ANZ maintained a Cash Return on Equity (ROE) of 10.7%, excluding capital retained for the acquisition of Suncorp Bank, reflecting solid financial efficiency amid strategic investments and market challenges.
ANZ's proactive capital management strategy, including the planned share buy-back and the recent Suncorp acquisition, aims to optimize its capital efficiency and enhance shareholder value. The anticipated adjustments in ANZ's Level 1 and Level 2 Common Equity Tier 1 (CET1) ratios to 12.2% and 11.8%, respectively, post buy-back reflect a strategic effort to strengthen its financial position amidst economic uncertainties. To mitigate risks associated with economic uncertainties and geopolitical tensions, ANZ's rigorous credit risk management practices and prudent financial controls will be crucial. The bank's ability to adapt swiftly to changing market dynamics and regulatory landscapes will determine its resilience and growth trajectory.
ANZ continues to lead with a robust customer-centric approach and innovative strides across both retail and institutional banking sectors. The bank's consistently high Net Promoter Scores and monthly acquisition of approximately 35,000 new customers, half of whom are newcomers, highlight its strong market presence and effective customer engagement strategies. The introduction of the API-enabled PayTo service for billers in Australia highlights ANZ's proactive approach in advancing digital payment solutions, aiming to enhance both efficiency and industry standards.
Source: Company’s Report
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