Aveo Retirement Village Dividend Analysis

This assignment delves into a critical evaluation of Aveo Retirement Village's dividend history over the past five years. It examines the company's dividend policy, dividend level trends, and earnings per share to provide recommendations on preferred policies and dividend levels. The analysis utilizes historical data on dividends, dividend yield, return on equity, shareholder returns, and payout ratios to assess the viability of Aveo's current dividend strategy and its future prospects.

Finance

INTRODUCTION
The current study is based on the critical evaluation of Aveo Retirement Village’s dividend
history in past 5 years, by considering the company's dividend policy and dividend level. On
the basis of the analysis, recommendation on preferred policy and dividend level will be
provided and an appropriate conclusion and reasoning will be briefed at the end.
DIVIDEND ANALYSIS
A BRIEF OF AVEO GROUP LIMITED: RETIREMENT VILLAGES
Aveo Group Limited is into the business of development, operation and management of
retirement communities. There are various activities the Company is involved into but
principally top in list are investment in retirement villages and their development and
management; developmental activities for the purpose of used properties like resale of land as
well as residential, commercial, retail and industrial property; it also makes investment in,
and does management of real estate sectors income-producing retail, commercial and
industrial property; building of commercial, industrial and residential nature and construction
for the Company, and management of funds and asset (Annual report of Aveo Group, 2017).
There are two segments through which the company operates, namely retirement and non-
retirement real estate segments. Retirement segment develops and operates into retirement
villages and specific aged care facilities so as to produce rental and other income. The other
non-retirement segment develops the residential, commercial and retail property for public
and is not segment specifically.
Past 5 year’s dividend history of AVEO Group Limited
Table 1: Aveo’s Dividend History
Aveo’s Dividend
History
2013
(in ¢)
2014
(in ¢)
2015
(in ¢)
2016
(in ¢)
2017
(in ¢)
H F Result - 4 5 8 9
Final 1 - - - -
Interim - - - - -

Table 2Aveo’s Dividend Yield
Aveo’s Annual Dividend Yield 2015 2016 2017
Annual Dividend Yield (in %) 1.9 2.5 3.2
Aveo’s Annual Dividend ((in ¢) 5 8 9
Table 3Aveo’s Return on Equity, Shareholders Return and Dividend Payout Ratio
Aveo’s Group Limited
Particulars
2013 2014 2015 2016 2017
Return on equity (in %) 4.2 8.8 5.3
Shareholder’s Return (in %) - - 27.7 26 -9.5
Payout Ratio (in %) - - - 29 50
From the Table 1 given above, it is clear that Aveo Group Limited has distributed the
small sum of dividend in a period of last 5 years but in an increasing fashion. Therefore its
dividend payout ratio is showing a rising trend from 29 to 50 in Figure 3. Also according to
Table 2 given above, the Annual dividend is gradually rising in order from 5-8-9 and so is its
dividend yield. That is a very systematic and planned way a company has distributed to its
stakeholders in last few years in an increasing order satisfying the gut of an investor, which
would mean that the company has not shown any disappointing performance.
Critical evaluation of dividend history and earnings per share
As per the statistics are given in Figure 1 and Figure 2, read with Figure 3 given above, the
Company has consistently paid rising dividend since 2013. Also, the earning on the equity
has risen from 2015. According to which it can be said that the company payout history is
growing with payout ratio rising to nearly double from 2016. Although the shareholder's
return shows a negative fall in 2017 but cannot be treated as a negative feedback in entirety.

Analysis of Dividend policy and recommendations
Table 4Investment Analysis
Year Securities price at year-end
(in $)
Profit after tax
($m)
Price-earnings ratio
2013 1.27 39.2 9.3
2014 2.06 42.1 21.7
2015 2.58 54.7 23.7
2016 3.17 89 18.6
2017 2.78 108.4 14.7
Based on the statistics provided in the figure above, Aveo’s security prices, as well as the
profit, earned after tax is showing an ascending order. This shows that the company is in its
growth period and is well to do in order to attract and satisfy the investor’s intentions as that
of a profitable stock (Aveo Group (AOG), 2017). The stock is recommendable to investors
looking at it rising payout in addition to its profits, dividend and stock price over the period
of 5 years.
CONCLUSION
Based on the dividend distributed and the dividend payout the company seems attractive and
reasonably well to invest into looking at the real estate industry growth trends in mind. Since
the company is systematically and in a planned manner gaining earnings for its investors, it is
expected to do well in the foreseeable future (Renneboog and Szilagyi, 2015). Since the
consistently rising profits is favourable, adopted policy by the company is viable.

REFERENCES
Annual report of Aveo Group. 2017. Available through < https://www.aveo.com.au/wp-
content/uploads/2017/09/AVEO-2017-Annual-Report.pdf>. [Accessed on 6th October 2017].
Aveo Group (AOG). 2017. [Online]. Available through <
https://www.investsmart.com.au/shares/asx-aog/aveo-group>. [Accessed on 6th October
2017].
Renneboog, L. and Szilagyi, P.G., 2015. How relevant is dividend policy under low
shareholder protection?. Journal of International Financial Markets, Institutions and Money.