Dividend Portfolio: Challenger Limited (ASX: CGF)
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Overview:
Challenger Limited (CGF) is an investment management firm focusing on providing Australians with financial security in retirement. Challenger operates two core investment businesses, Life division, and Funds Management division. As of 31 December 2014 Total Assets Under Management were $57.2bn an increase of 12.7% compared to pcp.
Dividend and Investment View:
Strong retail sales in its annuities and growing funds under management (FUM) reflect CGF’s strong development in building a leading retirement income platform. CGF’s 52 week high is at $8.20 and its 52 week low is $5.80. The stock has retreated nearly 30% between July and December 2014 during volatile market conditions and as statutory net profit decreased 21.8% compared to pcp mainly due to tax expenses. However, the company has increased its revenue flow by 9.6% and experienced modest growth across most divisions. The board announced an interim dividend of 14.5 which is an increase of 16%. The shares will trade ex-dividend on 2 nd March 2015 payable on 31 st March 2015. The dividend is 70% franked (2013: unfranked) and Challenger expects its final dividend to be 100% franked and in the range of 45% to 50% of normalised net profit.
We are attracted to CGF’s income profile, healthy funding position, and good dividend yield. We believe the company is well-positioned to deliver long-term shareholder value and we initiate coverage with a ‘buy’ recommendation.
Please note: The recommendations of the ‘Dividend Portfolio’ have a medium to long-term outlook.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
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