CSL share price jumps after 2020 dividend boost and profit update
The CSL share price jumped more than 7% by midday after the company reported US$2.1 billion in profits.
It seems that some dividend investors get to have their cake and eat it too this year. Australian biotech and market favourite CSL (CSL) declared today that this year's final dividend will be its biggest yet.
Dividends are a percentage of a company's profits that some companies choose to pay to shareholders twice a year. Because of challenges related to COVID-19, many companies such as the Big Four banks have chosen to reduce or scrap their dividends entirely in 2020 as profit margins plunge.
CSL is one of the few among the large-caps to buck the trend. In its annual profit results today, it announced an annual net profit of US$2.1 billion (up 10%) together with a final dividend of $1.48 (unfranked). The latest update brings the full-year dividend to $2.95 per share, up 11% from the year before.
If you're a CSL shareholder, you can expect to receive your dividend payment on 9 October 2020. To be eligible for the final dividend, you'll need to hold shares in CSL as of 10 September, which is CSL's ex-dividend date.
- CSL Ex-dividend date: 10 September
- CSL payment date: 9 October
- Dividend per share: $1.48
- Franking: Unfranked
CEO Paul Perreault said in a statement he was happy with the latest numbers: "I am pleased to report an exceptional result against a backdrop of complex and unexpected challenges brought about by the COVID-19 pandemic.
“Our largest franchise, the immunoglobulin portfolio performed extremely well, with Privigen sales growing 20% and Hizentra sales up 34%," he said.
Investors must have been similarly pleased. By the end of Wednesday, its share price was up 6.4% to close at $312.05.
Is CSL a buy?
CSL is one of the big ASX success stories of the decade. In March this year, the Aussie biotech overtook CommBank (CBA) to become the largest listed stock on the Australian Securities Exchange (ASX) by market cap.
In the last 5 years alone, its share price has jumped a whopping 247% from just $90 in 2015 to over $335 at its peak in February this year.
The question for investors is whether it can continue its meteoric stock price rise or potentially look to increase its dividend.
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Compared to other top 10 ASX blue chip stocks, CSL has a low dividend yield of just 1%. Other top companies such as the Big Four banks and BHP (BHP) have annual yields of around 5-7% (pre-COVID-19, at least).
Instead, the company has focused on reinvesting profits into R&D and expansion into new markets, including China and the US. That strategy appears to be paying off. Last year, about 90% of its earnings were attributed to its overseas businesses.
Having launched in 1919, the company is an established global leader in the study and collection of blood plasma. This has placed it in a powerful position in a high-demand market that is difficult for competitors to enter.
The company is also playing an important role in the pursuit of a COVID-19 cure, including partnering with the University of Queensland to develop and manufacture a vaccine. And it's in talks with Oxford University regarding the potential manufacturing of the AstraZeneca vaccine candidate.
Among the major brokers, Ord Minnet updated its target price to $280 as of 19 August. Meanwhile, Citi and UBS – which last updated their ratings in early August – have distinctly higher price targets of $334 and $320.