Value Investor: Four blue chips that delivered this earnings season

By Brian Soh

Yield-seeking investors have been forced into equities by low or negative real yields on traditional sources of retirement income, like term deposits, hence the market’s keen interest in the size and timing of dividends, special dividends and capital returns.

Telstra also announced a $1bn share buyback, motivated by recent asset sales, with a positive response from the market.

A central theme so far has been capital management, with share prices moving in response to  distributions to shareholders.

Earnings per share grew 11. 7 per cent over the year, with equity per share growth of 8. 09 per cent outperforming the 6. 23 per cent increase in dividends per share.

With the addition of 937,000 subscribers over the period, Telstra now holds 54 per cent of the mobile market.

Telstra’s pleasing headline result for fiscal 2014 saw revenue up 1. 2 per cent to $26. 3 billion and after-tax profits increasing 12 per cent to $4. 28bn.

With their continuing confidence in iron ore demand from China, BHP and Rio are prepared to accept lower margins in the near term and benefit from higher market shares in the long run.

Although the proposal was met with a largely negative reaction by the market, after our analysis on return on assets (below), we see the demerger as a sound move for BHP over the medium term.

For iron ore miners such as BHP and Rio, the benefits of cost reductions and iron ore production growth have been offset by lower iron ore prices.

Alan has been a trusted source of investment advice to Australians for many years, and in 2005 he founded Eureka Report - Australia’s #1 online investment report.

Read more here: Business Spectator

    

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