Investors like to add blue chip stocks in their portfolio mainly for stable and consistent growth. Blue Chip Companies normally offer stable earnings low volatility and consistent returns.
Vicinity Centres (ASX: VCX)
Vicinity Centres in its fiscal year 2024 results covering the period that concluded on 30 June 2024 reported total revenues of $1.32 billion for FY24, an increase from $1.28 billion in the previous year. The Statutory net profit after tax (NPAT) was recorded at $547.1 million, a significant rise from $271.5 million in FY23. The Funds From Operations (FFO) and Adjusted FFO (AFFO) per security exceeded the anticipated range, standing at 14.6 cents and 12.3 cents, respectively, attributed to robust leasing results and overall portfolio performance.
The company’s strong leasing results also bolstered both current and future income growth, with occupancy rates at 99.3%, a positive leasing spread of 1.1%, and an average annual escalator of 4.8% on new leases.
As of 30 June 2024, the company maintained a solid cash position of $49.6 million.
Over the last five years, the company has demonstrated consistent revenue growth, rising from $1.2 billion in 2020 to $1.32 billion in 2024. Concurrently, it has markedly enhanced its earnings profile, with funds from operations (FFO) increasing from $417 million to $664 million. Additionally, there has been a significant rise in net operating cash generation, which grew from $472 million to $690 million during the same timeframe. The overall financial structure and debt profile of the company have also remained stable with an asset base of $15.7 billion and total debt of $4.6 billion.
The company, best suited for long term growth is persistently moving forward with its strategic expansion initiative, concentrating on acquiring premium retail properties while simultaneously enhancing the quality and ambiance of its current retail store network. This dual focus aims to elevate Net Promoter Scores (NPS) and enrich customer experiences. Following the successful completion of four minor projects, the company is making significant strides on major developments at Chadstone and Chatswood Chase, with anticipated completion dates spanning from FY25 to FY27. This progress facilitates the company's strategic expansion and enhancement objectives. Furthermore, the organization has outlined essential divestments for the upcoming year, which are expected to bolster overall asset performance and optimize operational efficiency.
Brambles Limited (ASX: BXB)
Brambles Limited’s financial report for the year ending on 30 June 2024, demonstrates significant financial strength and operational efficiency.
Sales revenue increased by 8% to $6,545.4 million, and underlying profit rose by 18% to $1,262.2 million. Operating profit after tax grew by 19% to $779.9 million. Basic earnings per share also saw a 19% increase, reaching 56.1 cents.
The company achieved a return on capital invested of 20.6%, up 2.1 percentage points from the previous year.
Cash flow from operations surged to $1,319.1 million, marking an increase of $529.3 million. Free cash flow before dividends rose to $882.8 million, up by $384.7 million, while free cash flow after dividends reached $476.8 million, an increase of $297.3 million.
For FY24, Brambles Limited declared a final dividend of 19.00 US cents per share, bringing the total dividends for the year to 34.00 US cents per share. This represents a 30% increase compared to the previous year, reflecting the company’s strong free cash flow generation. The payout ratio for FY24 was 60%, up from 55% in FY23, highlighting Brambles' commitment to returning value to shareholders while maintaining robust financial health.
In FY24, Brambles Limited achieved significant improvements in pallet cycle times and loss rates within customer supply chains, driven by enhanced asset efficiency and investment optimization. These efforts led to a reduction of approximately 15 million pallets purchased, thereby improving capital efficiency.
Brambles Limited is among the best blue chip stocks. Its outlook for FY25 projects a solid performance with sales revenue growth expected to be between 4-6% at constant foreign exchange rates. Underlying profit is anticipated to grow by 8-11% on a constant FX basis.
Brambles Limited’s announcement of a $500 million on-market share buy-back program demonstrates management’s confidence in its operational capabilities and future performance. By reducing the number of outstanding shares, the buy-back program can increase earnings per share (EPS) and apply upward pressure on the stock price, which often signals positive future expectations and attracts investors.
Source: Company’s Report
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