which are generally stable.
Resimac Group Ltd (ASX: RMC)
In FY24, Resimac Group Ltd (ASX: RMC) faced a challenging market environment, with significant competition in the mortgage sector impacting performance. Despite this, the company saw positive growth in its Asset Finance business, reaching $1.1 billion in AUM, a sharp rise from $600 million in FY23. However, mortgage originations suffered due to aggressive pricing from banks, which were able to leverage low-cost funding provided by the Reserve Bank of Australia (RBA) after the COVID-19 pandemic. Resimac's net profit after tax (NPAT) decreased to $43.1 million, a 42% drop from the previous year. In response to the higher risk profile of its Asset Finance portfolio, Resimac increased provisions to manage potential credit losses, reflecting a cautious approach to the evolving economic conditions.
Despite these challenges, Resimac made strides in strategic initiatives, including the acquisition of Westpac’s auto finance book in October, which will enhance its asset financing business. The migration of this portfolio to Resimac’s systems is expected to be completed by mid-FY25. The company also recognized the need to streamline operations to strengthen its cost-to-income ratio and improve efficiency. This focus on cost discipline, combined with a positive outlook for FY25, signals a recovery and growth trajectory. Resimac anticipates improved business volumes in its home lending products, with expectations of lower interest rates from the RBA stimulating demand in both mortgage and asset finance sectors.
As a result of the challenges faced in FY24, Resimac declared a reduced dividend of 7 cents per share, down from 8 cents the previous year. This decision reflects the impact of fierce competition and rising operational costs on profitability. While the reduction in dividends is never ideal, Resimac, one of the best long term dividend stocks, remains committed to maintaining shareholder value while navigating a tough economic climate. The company’s strategy moving forward is focused on technology investment and operational improvements, with the goal of driving growth and enhancing service offerings in FY25 and beyond.
Deterra Royalties Ltd (DRR)
In the December 2024 quarter, Deterra Royalties Ltd (ASX: DRR), considered among high quality dividend paying stocks, reported strong portfolio revenue of $59.3 million, marking an 11.7% increase from the previous quarter. This growth was driven by Mining Area C (MAC), which achieved record volumes from the Central Pilbara hub, contributing $53.0 million in iron ore royalty revenue—up 4.6% from the prior quarter. In addition, gold offtakes delivered a net realised margin of $5.2 million from 109.8 thousand ounces, while other royalties generated $1.0 million, up by $0.5 million. Noteworthy progress was made at the Thacker Pass Lithium Project, with key milestones such as securing a $2.26 billion loan from the U.S. Department of Energy and a $625 million investment agreement with General Motors. These moves de-risk the project and largely secure funding for its first phase, with production expected in late 2027. Additionally, Thacker Pass has become the world’s largest measured lithium reserve and resource, doubling its planned production capacity and extending the mine-life to 85 years. Deterra’s global team has also undergone restructuring following the acquisition of Trident Royalties, positioning the company for future synergies and continued growth.
Deterra’s performance in FY24 remained strong, with revenue from Mining Area C up 5% despite slightly lower production volumes. The ramp-up of the South Flank expansion contributed to increased royalties, while mineral sands royalties saw a 16% rise. A net profit of $155 million was generated, which was fully distributed to shareholders in dividends. With a dividend payout ratio of at least 50%, Deterra has maintained a disciplined capital management approach, using debt to fund the Trident acquisition while still ensuring value for shareholders. The company’s strategy focuses on diversifying its portfolio beyond iron ore, with the Trident acquisition and the development of Thacker Pass seen as key to driving long-term growth and enhancing shareholder returns.
Source: Company’s Report
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