Since the JSE All Share Index hit an all-time high earlier in January, the index is down around 9%.
As a result, many JSE listed share prices have also fallen.
Now, as you know, when a company’s share price falls, its dividend yield rises.
That means, there’s quite a lot of JSE stocks sitting on high dividend yields right now.
One of these high-yielders is a 162-year-old transport guru.
At a yield of 10.75%, the company will pay DOUBE the INCOME than what you would receive from the average share on the JSE!
The question today is…
Is this high-yield payer dividend safe?
Frontier Transport Holdings Limited (JSE: FTH) has been around for 162 years with a portfolio rooted in the commuter bus and luxury coach segments.
It owns Golden Arrow Bus Services (GABS), which operates 1051 buses in the Cape metropolitan area.
They transport 56 million passengers annually. That’s around 220,000 passengers per day!
FTH owns Table Bay Rapid Transit service – which runs a fleet of 78 MyCiti busses for the city of Cape Town.
They own Sibanye Bus Services, which operates 59 buses providing services from Atlantis to the Cape Metropol.
They also offer a few other services such as luxury buses for school tours and a shuttle service.
With a market cap of just over R1.5 billion, Frontier makes around 30% of its value in operating profit in a year.
Is a solid track record of paying dividends enough?
The company has paid a dividend since 2018 and has never cut it. Not even during the Covid Pandemic.
So, its track record doesn’t contain any red flags… but it is quite brief.
In Frontier’s most results, it paid out over R133 million in dividends – which on a per share basis, equated to 35c.
That puts the company on an attractive yield of 10.75%.
It also put the company’s pay-out ratio on a very sustainable 56%.
Another key area to look at is cash.
As of last reporting results, Frontier boasted a net cash position of around R500 million.
That means it holds around 38% of its market cap in cash!
Frontier also managed to reduce some of its debt over the past year meaning lower interest payments in the future.
So, when you consider Frontier’s low pay-out ratio, low debt and massive cash pile, you can bet its dividend is safe for now.
If you’re looking to set up a high income paying portfolio, then make sure you get a copy of my Retire Rich with Dividends report. Inside, I include full profiles on five such companies on the JSE right now that I believe everyone should have in their portfolio.
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