To generate passive income, investors look for quality high yield dividend stocks. Two such stocks are
Helia Group Limited (ASX: HLI)
Helia Group Limited recently reported its financial results for the year ended 31 December (FY24) demonstrating a robust performance and outlining a promising future. The company achieved a statutory net profit after tax (NPAT) of $231.5M and an underlying NPAT of $220.9M. The higher statutory NPAT was primarily attributed to pre-tax mark-to-market unrealized gains on infrastructure and equities. This strong financial position has enabled Helia to continue its disciplined capital management strategy, which includes significant returns to shareholders.
In line with its commitment to shareholders, the company, among the top dividend paying stocks, approved an increased fully franked final ordinary dividend of 16.0 cents per share and a fully franked special dividend of 53.0 cents per share. In addition, Helia executed on-market share buy-backs totaling $113.4M in FY24, which led to a 9.4% reduction in the number of outstanding shares. The company has also announced an increase in its current on-market share buy-back to $200M with $121M still outstanding. Helia's capital adequacy remains robust with the prescribed capital amount (PCA) coverage ratio increasing to 2.10 times comfortably above the board's target range of 1.40 to 1.60 times. This strong capital position is a result of healthy profitability in FY24 and a reduced regulatory capital requirement driven by portfolio seasoning and a high level of policy cancellations.
Helia's operational performance also showed positive trends. Gross written premium (GWP) increased by 6% to $195.6 million compared to the previous corresponding period (pcp). This growth was primarily fueled by a recovery in high loan-to-value ratio (HLVR) lending and an increase in Helia's LMI market share. Helia experienced an exceptionally low claims environment in FY24, with total incurred claims being negative $37.2M. This favorable outcome was largely due to strong house prices which contributed to healthy home equity and increasing yet manageable delinquency experience. The company continued to demonstrate strong customer relationships maintaining a 100% success rate with 2024 contract renewals. In addition to that, Helia's Net Promoter Score (NPS) saw an increase of 4 points from 2023 reaching +83.
Looking ahead, Helia anticipates FY25 insurance revenue to be in the range of $310M to $390M. While the company expects a modest increase in arrears due to a potential softening in the labor market, it projects the total incurred claims ratio to remain well below its through-the-cycle expectation of approximately 30%. This confidence stems from the significant positive equity embedded in Helia's portfolio which is expected to continue benefiting claims. Helia is focused on expanding the LMI market, enhancing its operational efficiency and strengthening its data governance. The company also continues its dialogue with the government, emphasizing the critical role of a robust LMI industry and advocating for policy adjustments to optimize housing support initiatives.
Super Retail Group (ASX: SUL)
Super Retail Group has recently provided an update on its FY25 trading performance and future outlook. The company's recent communications highlight its focus and performance in a dynamic retail environment. The Group's dedication to its core brands, customer engagement and efficient operations remains central to its strategy.
The first half of FY25 saw Super Retail Group achieve solid sales growth of 4 percent reaching $2.1B, a commendable outcome given challenging consumer conditions particularly in New Zealand. Group like-for-like sales growth for the first half stood at 1.8 percent. The Group's focus on pricing and promotional discipline combined with strategic initiatives in supply chain, stock availability, merchandising and ranging contributed to accelerated growth in the second quarter for BCF and rebel. Key highlights included a 10 percent increase in online sales to $286M representing 14 percent of Group sales with Click & Collect accounting for 46 percent of online sales. The Group also experienced continued growth in active club members increasing by 8 percent to 12M, who represented 79 percent of total sales. The rebel active loyalty program successfully completed its first full year implementation, meeting or exceeding its targeted KPIs. Store network expansion continued with 19 new store openings and 14 refurbishments. SUL, one of the high quality dividend paying stocks, also determined to pay a fully franked interim dividend of 32 cents per share.
Looking ahead for the second half of FY25 (weeks 27-44), the Group's like-for-like sales growth has shown improvement reaching 3.1 percent primarily driven by continued positive momentum at BCF. However, retail conditions have generally remained subdued particularly in New Zealand. Group gross margins in H2 FY25 to date are tracking below the prior comparable period consistent with the decline observed in H1 FY25. Super Retail Group is actively managing its cost base in this lower growth environment emphasizing a shift away from lower-yielding promotional activities while maintaining competitiveness. Significant investments are underway including a new semi-automated distribution centre in Truganina, Victoria which is expected to commence a phased opening in 2H FY25. This new DC is anticipated to bring efficiencies in operating expenses, working capital savings and enhanced online fulfillment capabilities. In addition, the Group initiated a project to replace its payroll system and build an associated Human Resources Information Management (HRIM) system with these project costs being reported in the Group and Unallocated segment. Total Group and Unallocated costs for FY25 are projected to be $42M, an increase from $36M in FY24 partly attributable to duplicated operating expenses associated with the new Victorian distribution center and the new payroll and HRIM system. The Group plans to open 28 new stores in FY25 across its brands (11 Supercheap Auto, 5 rebel, 4 BCF, 8 Macpac). These ongoing investments, coupled with enhancements to customer loyalty programs and digital capabilities, underscore the Group's strategic commitment to growing its core brands, leveraging customer relationships, and excelling in omni-retail execution
(Source: Company Announcements)
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