Interesting market reaction. I haven't bought any new MTS since...

Interesting market reaction. I haven't bought any new MTS since 2012 but I doubled my holding today.

At market close yesterday ($3.53), 60% payout ratio was going to be around 15.5c for the full year for a yield of 4.4%. Now with the drop in SP to $3.37 at time of posting and payout ratio up to 70%, the div should be about 18c and yield rises to 5.3%, or 7.6% with franking.

And they say it's "effective FY21" which seems to imply the upcoming dividend should be about 80% payout ratio to get the full year average to 70%. If so that would be a 10c final div. Heaps of excess franking credits too so it is looking like a good income opportunity here IMO.

Obviously there are risks particularly in Food, around losing more customers like Drakes and the risk that the gains due to COVID might not be sustainable as the big players ramp up to try and win back market share from IGA. But the other pillars form a lot more of the total EBIT than they did even 5 years ago so they aren't quite as dependent on growth in Food as they used to be, and I do think they're finding a niche in Food too, with the Diamond program. They are switching focus from IGA stores being smaller, more expensive versions of Coles to offering a more boutique style store. And now they're switching the lessons learned into Hardware and Liquor as well with similar programs.

All in all there might not be much opportunity for big growth here but it does seem a pretty efficient way to harvest franking credits.