Question 1: In Monday’s Switzer Report, you wrote that the Westpac’s (WBC) profit result was “as expected” and as a result, there would only be very minor changes to the major broker forecasts and recommendations (see https://switzerreport.com.au/westpac-delivers-but-has-it-rallied-too-far/). Were there any changes?
Answer: None of the major brokers changed their recommendation. The consensus target price slipped very marginally from $26.00 to $25.87.
Question 2: When do NAB and Westpac trade ‘ex-dividend’? When will the dividends be paid?
Answer: National Australia Bank (NAB) is paying a final dividend of 78c per share, fully franked. It will trade ‘ex’ the dividend on Tuesday 15 November. The dividend will be paid on 14 December.
Westpac (WBC) is paying a final dividend of 64c per share, fully franked. It will trade ‘ex’ dividend on 17 November. The dividend will be paid on 20 December.
Question 3: I am in a couple of DRPs (dividend re-investment plans). Do you think they are a good idea?
Answer: I think DRPs work quite well for long term investors who have a portfolio of quality stocks. Going back in time, they were considerably more attractive because most companies issued shares at a discount to the market price. Today however, most DRPs offer no discount.
The downside with DRPs is they tend to become “set and forget”, and if you are in an underperforming stock, you end up just increasing your investment in an underperformer. So they need active monitoring.
It is easy to change your DRP preferences. Following profit results and the declaration of dividends, most companies give investors a few days to change their preferences (I.e. they might cease to participate in the DRP and take the cash instead of the shares). Contact the share registry. In the case of NAB and Westpac, which have both announced dividends, the cut-off dates to change DRP elections are COB 17 November and 21 November respectively.
Question 4: Why has Resmed (RMD) slipped a touch? Is this still a good growth stock?
Answer: Resmed’s (RMD’s) primary listing is in New York and as such, reports quarterly. Its recent earnings report delivered on top line growth, but higher costs impacted bottom line earnings. Also, the market was a touch disappointed with sales outside the USA, and ongoing discussion that competitor Phillips may be shortly to resume sales.
As for the local brokers, they are still quite positive on the stock. Of the six major brokers, there are three ‘buy’ recommendations and three ‘neutral’ recommendations. The consensus target price according to FN Arena is $36.63, about 12.5% higher than the last ASX price of $32.61. The range of target prices is a low of $32.80 up to a high of $37.75.
Resmed is a good company with strong growth prospects.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
