norfolk builds defence against downturn, page-5

The failure of Hastie, which has more Australian revenue than Norfolk, presents a huge opportunity for Norfolk. It could pick over the bones and buy some cheap assets, and/or pick up lots of extra work at higher margins due to reduced competition.

Either way, the future earnings of Norfolk look a lot rosier.

Norfolk has none of the problems faced by Hastie. It has no net debt and ROE of around 20%. Unless Norfolk can reinvest the 75% of earnings it is not paying out in dividends, the dividend payout ratio must increase with time. Also it will become fully franked when taxes return to normal levels on profits.