How the Property Market Has Impacted Stockland’s Share Price

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What happened to the Stockland share price?

After hitting a low of around $3.70 in September last year, Australia’s largest residential property developer, Stockland [ASX:SGP], has been steaming ahead. Recently hitting a high over $4.40, the $10 billion-plus behemoth has put on close to 19% in six months.

With all the doom and gloom merchants predicting the end of the property cycle, it’s been the big banks that have taken the heat on any potential bubble. They’ve dropped close to 20% over the last 12 months. While all that has played out, Stockland has been quietly getting on with business.

Why did Stockland do this?

While the investment side of the property market has been impacted by higher lending hurdles and changes for international investors, the residential market remains strong. After settling close to 6,000 residential properties over the last 12 months, Stockland recently announced that they’d secured over 1,700 residential deposits in the last quarter alone.

Stockland also reconfirmed that it should reach its targeted earnings per share (EPS) growth of 6.5—7.5% for this financial year. I’m sure the banks would love to have a number like that!

This EPS growth has flowed through to higher dividends for happy Stockland shareholders. Even after the run up in the share price, Stockland is still trading on a current yield of 5.6%.

What now for Stockland?

Stockland CEO, Mark Steinert, is not one who’s fretting about the future. With a well-diversified property portfolio across Australia, the key markets of NSW and Victoria are trucking along. And Queensland and Western Australia are finally seeing some improvements across their property markets too.

While retirement living still generates less return for Stockland than residential property, it’s also a cornerstone part of its portfolio — a section of the market that will only increase with an ageing and growing population.

The key thing to watch for, though, is any upward move in interest rates. Any uptick in rates will flow through to demand, and could put a drag on the share price.

Matt Hibbard,
The Daily Reckoning

Matt Hibbard

Matt Hibbard

Matt Hibbard is Port Phillip Publishing’s income specialist. While most investors focus on making money in the short term, Matt takes a different view. He’s focussed on how you can invest today to grow wealthy in 10 or 15 years’ time. You can find more of Matt’s work over at Total Income where he’s hunting down the next generation of companies that could pay you more each year than you initially invest.
Matt Hibbard

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