Energy Developments

About the author:

Author name:

By Nathan Lead

Job title:

Senior Analyst

Date posted:

02 February 2015, 1:39 PM

Sectors Covered:

Infrastructure, Utilities, Banks

Energy Developments (ENE) has lifted 1H15 dividend guidance from 15cps (fully franked) to 20cps (75% franked). ENE has a progressive dividend policy, so the guidance sets the annual base going forwards as at least 40cps per year. This is above our previous 30cps forecast based on annualising the 1H15 guidance provided at the AGM. Based on the pre-announcement share price of A$5.45, the revised guidance implies a 12 month yield of approximately 7.3% or 10% grossed-up. Prior to the upgrade, ENE was trading on approx. 5.5% yield; to return to such a yield following the upgrade requires a share price of over A$7.00.

This news is likely to excite investors searching for dividend yield and growth. We also think there is scope for further EBITDA upgrades if power prices in Queensland remain strong and FX continues to run at current spot rates.

Our dividend forecast lifts 33% and we increase our share price target to A$6.30 (previously A$5.77).

More information

Morgans clients can access our detailed research report on Energy Developments (ENE). Alternatively please contact your Morgans adviser or nearest Morgans office.

Disclaimer(s): Analyst owns shares.

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