Sharechat Logo

Hellaby to pay bigger dividends

Monday 1st December 2014

Text too small?

Hellaby Holdings, the diversified investment firm, has lifted its dividend payout policy after recording strong cash flow and being told by investors that they want more yield.

The Auckland-based company has lifted its dividend policy to 75 percent of net profit after tax from a previous rate of 50 percent of profit, it said in a statement. The company reviewed its capital management policies due to an underperforming share price relative to earnings growth, and after deciding its balance sheet was strong enough to cope with making bigger dividend payments. The review considered free cash flow generation and feedback from shareholders and advisers that investors are increasingly searching for yield as well as growth, the company said.

"Hellaby's share price has remained largely unchanged over the past two years despite delivering a 44 percent increase in normalised NPAT and a 15 percent increase in dividends per share in the financial year to June 2014," managing director John Williamson said. "Our directors expect that the combination of strong earnings performance and an increased dividend pay-out should progressively lead to a re-rating of Hellaby's share price."

Shares of Hellaby rose 0.7 percent to $3.08, and have declined 5.6 percent this year. The stock is rated an average 'buy' based on four analyst recommendations compiled by Reuters, with a median target price of $3.45.

Chairman Steve Smith said the revised policy reflects the firm's "confidence in future cash flows" while keeping enough flexibility to support growth.

"With a very strong balance sheet to fund acquisitions, we believe it is now appropriate for shareholders to receive a larger proportion of our net profits each year," Smith said.

The policy is still subject to business performance, market conditions and capital requirements for growth, and will apply to the interim dividend to be announced with the first-half result in February.

The board also decided to suspend its dividend reinvestment plan, and is considering the merits of a share buyback, Hellaby said.

 

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Govt support for NZME/Stuff merger difficult, not impossible, says Jarden
NZ dollar stalled; US-China trade signals remain mixed
Ryman warns NZ, Australia to take population ageing more seriously
MARKET CLOSE: NZ shares fall as US-China trade concerns weigh on markets; Ryman slips
NZ dollar stalled; US-China trade deal may be postponed
AFT Pharmaceuticals starts to hit its straps
Crown seeks US$100m from Tui operator; Prospector moving on
Pacific Edge goes back to shareholders for another $20m
Crown seeks $100m from Tui operator Tamarind
Ryman underlying annual profit may rise by up to 17%

IRG See IRG research reports