ASX Dividend Stock for a Stable Long Term Growth

Looking to invest in Dividend Paying Companies that offer substantial stability to investors, supported by the company's resilient asset values and a portfolio that consistently delivers significant year-on-year growth, Rural Funds Group? is one company that can not be missed.

Among the Best Long Term Dividend Stocks, Rural Funds Group (ASX: RFF) comes to the fore.

Rural Funds Group (ASX: RFF)

Rural Funds Group, in its results showed strong growth across key metrics. Property revenue increased by 12.4% to $42.0 million, driven by robust rental income from macadamia developments. Earnings surged by 19.5% to $71.0 million, supported by both increased property revenue and favorable asset revaluations. Adjusted net asset value (NAV) climbed 4.8% to $3.07 per unit, reflecting substantial contributions from independently revalued assets, particularly in the cattle and macadamia sectors, which together added $72.2 million to the NAV. Adjusted funds from operations (AFFO) were reported at 4.0 cents per unit, underlining the strong operational cash flow generated during the period.

With adjusted total assets increasing by $128.6 million, driven significantly by asset revaluations and strategic capital expenditures, RFF has bolstered its asset base and operational capabilities.

Despite a slight increase in gearing to 36.2%, primarily due to investments in macadamia development, the overall adjusted net assets saw a healthy rise of $59.0 million, showcasing solid asset management and valuation practices. Additionally, improvements in debt metrics are evident, with a reduced cost of debt to 3.08% and a manageable Loan-to-Value Ratio (LVR) of 45.6%, comfortably meeting the FY24 covenant requirement of 55.0%.

The Interest Coverage Ratio (ICR), though lower at 2.25x compared to FY23, remains well above the covenant threshold of 1.5x, indicating ample capacity to cover interest expenses.

RFF has hedged and fixed 73.5% of its debt, up significantly from 45.7% in FY23. This higher level of hedging reduces RFF's exposure to interest rate fluctuations, thereby mitigating potential financial risks and ensuring more consistent cash flow management.

These financial indicators reflect RFF's effective management of assets, prudent financial strategies, and adherence to covenant requirements, positioning the group favorably for sustainable growth and value creation.

The company demonstrates a highly consistent financial growth trajectory, with revenues increasing substantially from $55 million in 2019 to $95 million in 2023. Additionally, the company's earnings have consistently exceeded the $40 million mark over the past five years. The growth in asset value has been particularly noteworthy, rising from $869 million in 2019 to $1.67 billion in 2023.

The current dividend yield for the company stands at 5.84%, offering investors an annual return on investment through dividends relative to the current stock price. Over the fiscal year, the yield has been 6.65%, surpassing the 5-year average of 5.03%. This indicates a consistent track record of delivering High Yield Dividend returns. The payout ratio, at 47.66%, shows that approximately 47.66% of earnings are allocated to dividends, suggesting a balanced approach to distributing profits while retaining capital for growth.

Source - Company Reports