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Buy Hold Sell: 5 stocks boosting their dividends over the next 2 years

Investors love a juicy dividend - but growing dividends, that's even better.
Buy Hold Sell

Livewire Markets

As this anonymous writer is reminded time and time again by our readers, investors love a dividend. 

Not only do they help provide investors with passive income during even the rockiest periods in markets, but they also make up a significant portion of Australian investors' total return over the long term. 

While the current outlook for dividends for the Aussie market may not be super hot, some stocks are boosting their dividend payouts over the next 24 months. 

So in this episode, Livewire's Ally Selby was joined by Ausbil Investment Management's Michael Price and Martin Currie's Reece Birtles for their analysis of three stocks with strong dividend per share growth expectations in both 2025 and 2026. 

Plus, they each share a stock they are buying today given its strong dividend growth expectations in the future. 

Note: This episode was recorded on Wednesday 11 September 2024. You can watch the video, listen to the podcast or read an edited transcript below.


Other ways to listen: 

Edited Transcript 

Ally Selby: Hey, how you doing? And welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today we're taking a look at five companies that are expected to grow their dividends per share over the next 24 months. To do that, we're joined by Michael Price from Ausbil and Martin Currie's Reece Birtles.

First up today we have Ramsay Health Care. It's expected to grow its earnings per share by 7% in 2025 and 24% in 2026. Michael, I'm going to start with you today. Is it a buy, hold, or sell?

Ramsay Health Care (ASX: RHC)

Michael Price (BUY): We've recently upgraded that one to a buy. Times have been tough for the hospitals, but we do think that those headwinds are bottoming and that gives scope for both margins and earnings to improve. As you've said, there's some really good growth coming through. We've got double-digit earnings growth for each of the next three years, and when you put those earnings into your numbers on a forward-looking basis, it's not too expensive. So, I think it's a good time to buy.

Ally Selby: Its share price has fallen more than 21% over the last 12 months. Are you seeing any value there, Reece? Is it a buy, hold or sell?

Reece Birtles (SELL): We think it's a sell. I think your intro on the dividend growth in 2026 - the problem is the promise. The company's revenue growth is quite limited to the private health insurance increases and a little bit of volume growth around 4%, but they're facing very significant cost pressures with nurses' wages and the like increasing at a much higher rate. So it's very hard to see how they can grow margins. And the real problem is that they built too many overnight beds, which is not what is needed in today's world where there's far more home care.

QBE Insurance (ASX: QBE)

Ally Selby: Next up today we have QBE Insurance. It's expected to grow its dividends per share by 12% in 2025 and 4% in 2026. Let's stay with you, Reece. Is it a buy, hold or sell?

Reece Birtles (BUY): QBE is a buy for us. We think they're doing a lot of good work to exit the more difficult lines of business that they have in North America. It's producing a more reliable business that has good premium growth, good margins, and better return on equity, and they're about to deliver that in the form of growing dividends. So it's a buy.

Ally Selby: Okay. Its share price has lifted around 9% over the last 12 months. Michael, is it a buy, hold or sell?

Michael Price (SELL): For us, this one's now time to sell. I think the result was a little soft and a little disappointing. It does look cheap relative to the market, but I think it's reasonably expensive relative to its own history and think there could be some earnings headwinds coming up, lower interest rates, and a bit of a softening in the insurance cycle. So look, it's been a good run, but I think time to sell.

South32 (ASX: S32)

Ally Selby: Last up today we have South32. It's expected to grow its dividends per share by 144% in 2025 and 28% in 2026. Michael, last one for you today. Is it a buy, hold, or sell?

Michael Price (HOLD): This one I just think you can hold. Dividends are growing strongly, but they're off quite a low base. Earnings have been poor because of operational problems. They have problems with all their assets. They're just not particularly exciting assets. I think they've done a good job to try and refocus on base metals. So, I don't mind being there for the longer term, but basically, other companies are preferred. I'll give it a hold.

Ally Selby: Its share price has fallen around 9% over the last 12 months. Is it a buy, hold or sell?

Reece Birtles (BUY): South32 is a buy. We like the fact that they're remixing the business towards future-facing metals, be it aluminium and copper in terms of their investments, and they're reducing their exposures to coal and the like. So they have a strong balance sheet, they're doing a buyback given the stock is undervalued and we think their Hermosa deposit in South America has very significant potential. And as they open that up, it'll be the next generation of mine and development for them. That is undervalued.

Ally Selby: We ask our guests to bring along an exciting dividend growth story on the ASX. Reece, what have you brought for us?

Flight Centre (ASX: FLT)

Reece Birtles (BUY): Flight Centre. They just delivered a 40-cent dividend. In FY25, it's likely to be around a 70-cent dividend. And that's really been on the back of the transformation of their business since pre-COVID, where in retail they've reduced their physical presence and their headcount but are doing the same amount of turnover, so it's a much more efficient business. And through COVID, they've built a corporate travel business that is delivering very strong returns.

In the coming year, it's going to be the year of delivery in terms of achievement of revenue and efficiency within excess of a 2% profit margin. The dividend will grow in FY25 and again in FY26 as their balance sheet gets stronger on those earnings.

Ally Selby: Okay. Over to you Michael. What is your exciting dividend growth story on the ASX?

Evolution Mining (ASX: EVN)

Michael Price (BUY): I've gone with Evolution Mining. They've recently announced that they're increasing their half-yearly dividend from two cents a share to five cents, so very significant increase. That's on the back of a stronger gold price and the fact that they've really reached the end of their CapEx cycle, have stronger free cash flow and can deleverage.

I like having some gold in the portfolio. I think it provides some protection against geopolitical risk and things completely going wrong, but they've also got a third of their earnings coming out of copper. And then longer term, decarbonisation, electrification - copper is our number one pick for any metal in the world, and happy to get some exposure to that as well.

Ally Selby: Well, I hope you enjoyed that episode of Buy Hold Sell as much as I did. If you did, why not give it a like? Remember to subscribe to our YouTube channel. We're adding so much great content just like this every single week.
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Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.

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