Ben Richards of Seneca Financial Solutions shares his top three stock picks for dividend growth potential and strategic value, noting that investors are particularly interested in fully franked and growing dividends.
His first selection is Pilbara (PLS), attracting attention due to takeover news from lithium giant Albemarle (ALB), highlighting the demand for lithium deposits in favorable jurisdictions. Pilbara has already paid its maiden dividend and sports a forecast yield of around 4%. If the company successfully ramps up production, the dividend may increase significantly.
The second choice is BlueScope (BSL), a mature company in the building materials sector. The firm recently upgraded its guidance by almost 50%, mainly due to higher-than-expected steel spreads. With a dividend of about 2.5% and strong free cash flow yield, there is potential for growth, and Ben points out that the company is currently undervalued.
Lastly, Ben identifies Monash IVF (MVF) as a stock with robust growth prospects, benefiting from supportive demographic tailwinds, expansion in Asia, and the resumption of elective surgeries following COVID. Monash IVF’s current valuation is 9.5 times EBITDA, but its share price could reach $1.60 based on valuation comparisons with competitor Virtus. Monash pays a 4% dividend, which has the potential to increase as the company continues to grow.
Watch the interview: Ausbiz – Top 3 stock picks for dividend growth potential