While the markets are hoping for another rate cut soon, the investors for passive income could resort to a few high quality dividend paying stocks.
Origin Energy Limited (ASX: ORG)
Origin Energy Limited (ASX: ORG) delivered a solid performance in the September 2024 quarter, with updates across its Integrated Gas, Energy Markets, and Octopus Energy segments. The Integrated Gas business reported a 1% increase in Australia Pacific LNG (APLNG) revenue quarter-on-quarter, reaching $2,638 million, driven by higher LNG sales volumes despite a slight decline in production. Realized LNG prices averaged US$11.95/mmbtu, while domestic gas prices stood at $9.59/GJ. APLNG continues to play a critical role in supporting Australia’s domestic market, supplying material gas volumes to local manufacturers.
The company, among top dividend paying stocks, offers an attractive dividend yield of 5.25%, highlighting its commitment to shareholder returns. Dividends from APLNG are anticipated to be fully franked for H1 FY25, providing a tax-effective income stream for investors. However, the franking rate is expected to reduce to below 50% in H2 FY25, before returning to full franking in FY26.
In the Energy Markets segment, electricity sales volumes grew by 3% year-on-year, attributed to an increase in retail customer numbers and higher demand. Gas sales volumes were stable, as stronger retail and gas-to-generation sales offset reduced business demand. Origin made notable strides in its renewables and energy storage initiatives, with construction progressing on large-scale battery projects at Eraring and Mortlake. Additionally, the Yanco Delta Wind Farm development in New South Wales is advancing, alongside assessments of other early-stage renewable opportunities. Octopus Energy maintained its strong growth trajectory, adding over 600,000 customer accounts across its UK and international markets during the quarter. This brought the total contracted customer accounts on its Kraken platform to 62 million, highlighting Octopus’s expanding global presence and its role as a disruptive energy and technology company.
Management highlighted APLNG’s consistent operational performance, which supported stable production and increased year-to-date sales and revenue. The company’s continued investment in renewables and storage aligns with its strategic pivot toward cleaner energy solutions. Meanwhile, Octopus Energy’s sustained growth and technological innovation strengthen its position in the global energy market. Overall, Origin Energy’s results underscore its resilience and strategic execution in a dynamic energy landscape. The company’s progress in electricity markets, renewable projects, and Octopus Energy expansion, coupled with strong LNG pricing and domestic gas supply stability, reinforces its diversified growth strategy and competitive positioning.
Korvest Limited (ASX: KOV)
Korvest Limited (ASX: KOV) had a strong financial year in FY24, with a profit after tax of $11.0 million, marking the third consecutive year of achieving or surpassing this figure. Despite FY24 revenue falling slightly short of the record set in FY23, reaching $102.9 million instead of $107.5 million, the company managed to maintain strong profitability. The reduction in major project revenue was offset by improved margins in the day-to-day market, as well as the strong performance of the Galvanising business, which recorded external volumes at record levels. The company is among high dividend stocks. It invested $4.5 million in capital expenditures, focusing on new capabilities and increased productivity, while also raising the final dividend to 40 cents per share, bringing the total for the year to 65 cents.
For FY25, Korvest expects revenue to be similar to the first half of FY24 but anticipates lower margins due to competitive pressures and project phasing. However, the company remains optimistic about the pipeline of major projects, including data centre work and ongoing infrastructure projects. The Galvanising business is projected to continue its positive performance with reduced gas consumption initiatives already in place. Korvest’s efforts in improving sustainability have also been notable, with a 47% reduction in lost time injury frequency rates and a focus on reducing Scope 1 and 2 CO2e emissions by 11%. Additionally, the company made strides in its environmental, social, and governance (ESG) activities, such as commissioning a heat exchanger to reduce gas consumption.
Korvest's strategy for FY25 revolves around managing competition in the day-to-day market while pursuing growth in major projects. The company’s solid capital investment and reinvestment into its operations, including the purchase of new equipment and trucks, is expected to improve delivery performance and service. While the first half of FY25 may face margin pressures, Korvest remains focused on its long-term growth and sustainability goals, with a well-managed approach to challenges such as fluctuating steel and gas prices. The outlook is positive, with the company prepared to navigate inflationary costs and maintain its focus on both operational efficiency and market expansion.
Source: Company’s Report
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