Some dividend paying companies, are equally positioning for growth. Two such stocks from ASX listed companies are
Fortescue Limited (ASX: FMG)
Fortescue Metals Group reported a strong start to FY25, delivering record iron ore shipments of 47.7 million tonnes (Mt) in Q1, including 1.6Mt from Iron Bridge. This positions the company firmly on track to achieve its FY25 shipment guidance of 190-200Mt. The robust operational performance was underpinned by a focus on safety, with the group achieving a Total Recordable Injury Frequency Rate (TRIFR) of 1.2. The quarter’s Hematite C1 cost increased 12% year-on-year to US$20.16/wet metric tonne (wmt), driven by higher strip ratios and inflationary pressures. Despite this, Fortescue achieved an average Hematite revenue of US$83/dry metric tonne (dmt), realizing 83% of the average Platts 62% CFR Index. Iron Bridge Concentrate commanded US$111/dmt, representing 97% of the Platts 65% CFR Index. These metrics underscore the company’s ability to generate strong margins despite cost headwinds.
Fortescue considered as among good quality dividend stocks, ended the quarter with cash of US$3.4 billion and net debt of US$2.1 billion, reflecting disciplined capital allocation. Key outflows included the FY24 final dividend payment of US$1.9 billion and US$0.8 billion in capital expenditure. The company maintained its FY25 guidance for shipments, C1 costs (US$18.50-19.75/wmt), and capital expenditure. Strategically, Fortescue advanced its green energy and technology initiatives. The Green Metal Project commenced at Christmas Creek, and the company unveiled its autonomous battery-electric T 264 truck, showcasing innovation in sustainable mining solutions. This was further bolstered by a landmark US$2.8 billion partnership with Liebherr to develop and deploy approximately 475 zero-emission mining machines, powered by Fortescue Zero’s proprietary battery technology.
Exploration activities progressed across multiple fronts, with US$80 million invested in Q1. In the Pilbara, iron ore drilling programs were conducted at Mindy South, White Knight, and Wyloo North, alongside near-mine exploration at the Chichester and Solomon Hubs. Internationally, work continued at the Belinga Iron Ore Project in Gabon, with significant progress in drilling. Fortescue also advanced its critical minerals exploration in Brazil, Argentina, and Peru. The company’s global green hydrogen portfolio remains a key pillar of its diversification strategy. Feasibility studies advanced at the Holmaneset Project in Norway, while the Pecém Project in Brazil received approval from the National Council of Export Processing Zones. In October, Fortescue announced plans to commence operations at its U.S. Advanced Manufacturing Center in Detroit, focusing on scalable battery technologies.
Fortescue’s commitment to sustainable growth and shareholder value creation is evident in its strong operational performance, strategic investments in green energy, and disciplined capital management. With significant progress in decarbonization technologies and a robust exploration pipeline, the company is well-positioned to deliver long-term growth and resilience in a dynamic market environment.
Solvar Limited (ASX: SVR)
Solvar Limited (ASX: SVR) has demonstrated strong growth across several key metrics, reflecting its continued success and strategic initiatives. In FY24, the company achieved a 10% growth in revenue and a notable increase in its loan book, which showed a CAGR of 48.8% for AFS loans and 15.8% for Money3 loans from FY21 to FY24. For FY24, Solvar recorded a Normalised Net Profit After Tax (NPAT) of $29.0 million, with a Statutory NPAT of $17.0 million, while also returning value to shareholders with a fully franked 5.0 cent dividend for both the interim and final periods.
In the first quarter of FY25, Solvar continued to show strong performance, particularly in its Australian operations. The Australian loan book grew by 8.5% compared to the previous period, reflecting steady market expansion. New loan originations, however, were down by 7.1% to $99.8 million. Despite this, the company improved its NPAT margin through lower bad debts and cost management. The NZ rundown has helped reduce impairment provisions, while Australian impairment provisions remained stable. The competitive landscape also became more favorable, as some competitors exited the market, contributing to the company’s improved outlook. Cash collections increased by 8.2% in Australia and by 2.1% at the group level. Furthermore, the company made significant debt repayments, reducing its liabilities by approximately $30 million in Q1.
Solvar one of the high dividend stocks, is projecting continued growth in FY25, with a forecasted Normalised NPAT of $34 million, representing a 17.2% increase over FY24. The company expects an 8% growth in its Australian loan book to reach around $850 million and aims to keep bad debt levels within the 3.5%-4.5% range. With a portfolio shift towards higher credit quality loans, the company anticipates improvements in yield and net interest margin (NIM). The competitive environment remains favorable, with some competitors leaving the vehicle financing sector, allowing Solvar to capture additional market share. Additionally, strong new vehicle sales are boosting the supply of used cars, benefiting consumer choice and improving affordability in the market.
Source: Company’s Report
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