CSL Results Point to Healthy Dividend: But Will it Move Down with Markets?

At time of writing, shares of biotech giant CSL Limited [ASX:CSL] are trading up 4.95%, at $230.36.

As you can see below, as a blue chip, the CSL share price has a strong proclivity to move with markets.

We’ve matched CSL up with XJO, and you can see that one of the very few times the two were not strongly correlated was following the release of their last earnings report:

Source: tradingview.com

From this, we can conclude that if the market was to make a strong downwards move, the CSL share price would likely be dragged down with it. This is despite a strong earnings report today, which revealed an improved dividend.

CSL pays a healthy dividend, but have you heard of these 5 dividend plays? They are well worth your consideration in a low interest rate environment.

Highlights from CSL results report

These were the main highlights from the CSL results report:

  • NPAT up 11% to US$1.92 billion
  • Revenue up 7.9% to US$8.5 billion
  • FY2020 forecasted NPAT of US$2.05 billion (7-10% growth)
  • Final dividend of US$1 or $1.48
  • Total full year dividend of $US1.85 or $2.68 up 18%

The report also noted the two immunoglobulin products (Privigen and Hizentra) were up 23% and 22% in sales respectively.

This was due in part to the use of Hizentra for Chronic Inflammatory Demyelinating Polyneuropathy (CIDP).

This strong profit and revenue growth as well as a healthy uptick in the CSL dividend should stand the stock in good stead for the immediate future, especially after Trump gave global markets a bit of relief recently.

The US President has delayed the 10% tariff on $300 billion of Chinese goods and they will now be effective 15 December.

Outlook for CSL share price

Given that CSL shares are strongly correlated with the ASX 200, the outlook for the CSL share price is largely dependent on which way the ASX will move in the next few months.

After hitting an all-time high last month, the ASX has recently slumped and then launched a recovery rally.

With markets starting to get choppy, Murray Dawes has an excellent look at the ASX sell zone in this video:

He concludes that once it enters this zone, the ASX could breakout higher or move sharply down.

The bottom line is that the next move will be a significant one.

So returning to CSL, there is an element of risk in the short term despite its forecasted growth in NPAT for next year.

If you are hunting for more dividend stocks to navigate a period of low or even negative interest rates, be sure to download our ‘Top 5 Dividend Stocks for 2019.’ The major appeal of our selections is that none of them are bank stocks.

Regards,

Lachlann Tierney

For Money Morning


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Ryan is involved in three publications:


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