Stock markets can be unforgiving beasts and earlier in the week we saw STO deliver a result that was a touch ‘light on’ while yesterday WPL produced a very strong set of numbers, the net result has seen WPL start to address some its underperformance post COVID and most importantly we feel there’s more left in the tank. WPL’s result was very strong comprehensively beating consensus estimates which MM actually believes will see it also catch up with its international peers on the relative performance front.
This is the first time I can remember that an Australian Oil & Gas company has so comprehensively beaten consensus estimates and at the same time provided a return to shareholders via a big dividend rather than reinvesting for future growth. We fully resonate with comments mentioned yesterday that much of the Energy Sector will become a dividend machine in the years to come – WPL is forecast to yield over 7.5% fully franked over the next 12-months. We are looking to exit our STO position into the next up leg in crude oil however if we were looking to hold for longer we would be looking to switch over to WPL.
MM now has WPL as its top pick for exposure to the local Energy Sector
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