Christmas has come early for the bank’s shareholders with the decision to slightly increase the 2024 dividend – despite a single-digit decline in the net profit and cash earnings.
Beating the market benchmark is never easy, with 72 per cent of Australian actively managed global equity general funds trailing the S&P World Index in the six months to June 30, 2024. Domestic equity funds performed slightly better, albeit against a significantly lower bar set by the S&P/ASX 200 Index.
Why would Kogan.com count as an ASX dividend share?
Could Kogan.com Ltd (ASX: KGN) be classified as a really good ASX dividend share?
The most obvious answer is the dividend yield. Using the last two dividend announcements, Kogan has a fully franked dividend yield of 2.1%, or 3% including the franking credits.
In the February reporting season, Kogan’s board decided to increase the dividend by 113.3% to $0.16 per share. Considering Kogan generated $0.35 of adjusted profit / earnings per share (EPS), or $0.22 of actual EPS, that’s a pretty healthy dividend payout ratio. The payout ratio of statutory profit is around 73%.
Kogan.com is a very scalable business, so it doesn’t need to hold onto high levels of capital to continue to keep growing the business at a high rate and improving the offering.
Indeed, one big part of the business is called Kogan Marketplace where sellers can sell products on the Kogan website. The business is trying to continue to invest in this side of the business – ongoing sales growth here doesn’t result in a corresponding increase in inventory.
So the dividend payout ratio could slowly increase and not actually impact the overall growth of the business.
Kogan says that it’s continuing to deliver significant projects to grow its products and services offering, while investing heavily in its brands.
What about the future dividends?
I think Kogan has shown its dividend intentions since 2017 – it has grown every year since then. That’s another good factor for being a solid ASX dividend share.
In 2017 it was $0.077 per share. The FY21 interim dividend was more than double that at $0.16 per share.
Using the projections on CommSec, Kogan is expected to pay an annual fully franked dividend of 37.5 cents per share – which would be a 3.9% yield with franking credits included. By FY23, it could pay a dividend per share of 49.2 cents which translates to a forward projected yield of 5% including the franking credits.
I don’t know about you, but those yields seem attractive to me. Combine that with the strong levels of growth that Kogan.com is achieving and I think it could produce good shareholder returns seeing as it’s valued at 37 times the estimated earnings for the 2021 financial year.
Information warning: The information in this article is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) and is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.
