It has been a shaky start for the ASX this week. Today, the ASX dipped by 0.6% at the time of writing this piece. RBNZ’s rate hike seems to have triggered a shift in momentum which has resulted in the banks and travel stocks taking the hit.
A2 Milk shares were the worst performing today as the stocks dipped over 7%, while CBA dropped by 2%. Travel stocks Webjet and Flight Centre have each dropped by over 6%.
A few of the top retail stocks on the ASX have also been caught in this momentum swing that started a week ago. This has opened up an opportunity for investors to add a few top quality retail stocks to their portfolio.
Wesfarmers is literally a giant. The company operates various businesses, from supermarkets, liquor, hotels, to home improvement and office supplies. Oh, and we should not forget one of the most important business divisions, the industrial arm. Hence, Wes is also involved in chemicals, energy, and fertilisers to name a few activities.
In FY21 earnings, WES recorded a solid operating cash flow result for the year. Operating cash flows of $3.3 billion were 25.6% lower than the prior year, with strong earnings growth offset by a normalisation in working capital positions across the retail businesses following the lower inventory and higher payables balances recorded at the end of the 2020 financial year as a result of elevated demand.
Wesfarmers maintained significant balance sheet flexibility during the year to support continued investment across the Group while addressing ongoing uncertainty. The Group recorded a net cash position of $109 million at the end of the year.
WES share price has been under pressure recently and it has dipped about 7% since late August. Wesfarmers is a sureshot earnings winner that also has a 3.24% dividend yield. It is definitely a blue chip stock to buy on the ASX for most investors.
JB Hi-Fi Limited (ASX: JBH) needs no introduction as a company to Australians. It is one of the premiere retailers for consumer discretionary products in the country. They operate under 2 brands – JB Hi-Fi and The Good Guys.
We are sure everyone reading this report has shopped at JBH at some point, if not every month. JB Hi-Fi and The Good Guys operate 314 stores across Australia and New Zealand as of FY2020. They are the market leader when it comes to retailing technology, home appliances, and consumer electronic products.
One of the competitive advantages they have is their retail partnerships with the biggest brands in the world – Apple, Samsung, etc.
JBH reported stellar results across the board for FY21. We have seen the company going through a hard time of the pandemic flawlessly, as the popular consumer electronic retailer registered a 12.6% growth in its total sales to $8.9 billion. Online sales have been massive. JBH reported $1.1 billion of revenue from its e-commerce platform which saw an increase in sales by more than 78% year on year.
Strong earnings also mean solid dividends, which set back the company to dividend growth, up 51.9% for FY21. JB Hi-Fi announced a solid final dividend which is up 18.9% to $1.07 share, bringing the total dividend for FY21 to $2.87 per share.
The JBH share price is down over 6% in the past 3 months. It also has a dividend yield of over 6%. It is a top dividend stock in the retail sector that is worth considering.
Woolworths is Australia’s largest supermarket. The company operates in Australia and New Zealand. In addition to the supermarkets, Woolworth also operates the Big W stores. During FY21, the sales and earnings profile across the business was very different in H1 and H2. This was because Woolies cycled the impact of COVID from late February onwards.
In Australian Food, full year sales increased by 5.4%, with H2 sales increasing by 0.2%. During the year, covid related costs declined compared to FY20. BIG W had another fantastic year with improved customer scores and strong sales and EBIT growth.
Woolworths announced a share buyback worth $2 billion. Additionally, the company also declared a 55 cents per share dividend. This brings the total dividend for the year to 108 cents. WOW is a top quality blue chip company. The share price is down 4% in the past month, but comes with a 2.7% dividend yield. WOW is one dividend stock worth considering for most inventors.