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2 ASX 200 shares to buy for income

The 2 S&P/ASX 200 Index (ASX:XJO) shares in this article could be buys for income, including retailer JB Hi-Fi Limited (ASX:JBH).
The post 2 ASX 200 shares to buy for income appeared first on The Motley Fool Australia. –

dividend shares

There are some S&P/ASX 200 Index (ASX: XJO) dividend shares that are very interesting ideas for dividend income including:

APA Group (ASX: APA)

This ASX dividend share is one of the largest ASX 200 shares, it’s focused on energy infrastructure investments.

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

The business has increased its distribution to investors every year in a row for a decade and a half. At the current APA share price, it has a distribution yield of 9.25%.

In FY20 it reported growth across the business. It said that total revenue increased by 4.8% to $2.13 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 5.1% to $1.65 billion, operating cashflow went up 8.3% to $1.1 billion and net profit after tax (NPAT) grew by 10.1% to $317.1 million. APA decided to increase the FY20 distribution by 6.4% to 50 cents.

In December the company announced an estimated FY21 interim distribution of 24 cents per share for the six-months to 31 December 2020, which was an increase of 4.3%.

The ASX 200 dividend share funds its distributions from its operating cashflow. APA has announced new projects in recent months which could lead to higher distributions.

In November it announced that it’s investing up to $460 million to construct a new 580km pipeline in Western Australia to connect emerging gas fields in the Perth Basin to the Goldfields region, forming an interconnected WA gas grid. This is expected to be operational around the middle of the 2022 calendar year.

Premier Investments Limited (ASX: PMV)

This ASX 200 dividend share owns a number of different retail brands including Smiggle, Peter Alexander, Portmans, Just Jeans, Jay Jays, Jacqui E and Dotti. It also owns around 28% of Breville Group Ltd (ASX: BRG).

Using the FY20 annual dividend of $0.70 per share, it has a grossed-up dividend yield of 4.5%.

COVID-19 was disruptive for the company’s retail store network, particularly overseas. However, the online sales and the operating leverage that brings, has more than made up for the bricks and mortar stores.

In a trading update for the first 24 weeks of the first half of FY21, online sales were up 60% to $146.2 million and contributed 20.4% of total group sales (up from 13.4% last year). Premier said that its online sales deliver a significantly higher earnings before interest and tax (EBIT) margin.

In the same 24-week period, total global sales were only up 5% to $716.9 million.

Premier said that there was exceptional growth of gross profit across the business, with a particular good performance by Peter Alexander, Just Jeans and Jay Jays.

The ASX 200 dividend share now expects Premier Retail EBIT for the first half of FY21 will be in a range of $221 million to $233 million, up between 75% to 85%.

Premier Investments said that it has and continues to maintain a strong balance sheet.

At the current Premier Investments share price, it’s trading at 15x FY21’s estimated earnings.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX 200 shares to buy for income appeared first on The Motley Fool Australia.

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