During the past six months, two AE Portfolio Holdings have been bought by foreign-based investors looking to capitalize on the quality of Australian assets, growth potential, skill and know-how.

There’s also the fact that the Australian dollar has depreciated considerably, which makes companies domiciled in the Land Down Under more attractive on a relative price basis.

Should all go according to Japan Post Holdings Co.’s plans, that figure will rise to three when Toll Holdings Ltd. (ASX: TOL, OTC: THKUF, ADR: TKHUY) shareholders vote in May on a AUD9.04-per-share, AUD6.49 billion takeover offer agreed to by Toll management and approved by the board in mid February.

Toll, just added to the Aggressive Holdings in the January 2015 issue, is the latest Portfolio recommendation to catch a bid from overseas.

Envestra Ltd., an original member of the AE Portfolio, was acquired on Oct. 20, 2014, for AUD1.32 per share by a Hong Kong–based consortium including Cheung Kong Infrastructure Holdings Ltd. (Hong Kong: 1038, OTC: CKISF, ADR: CKISY), Cheung Kong Holdings Ltd. (Hong Kong: 0001, OTC: CHEUF, ADR: CHEUY) and Power Assets Holdings Ltd. (Hong Kong: 0006, OTC: HGKGF, ADR: HGKGY).

From Sept. 26, 2011, through Sept. 12, 2014, when it was suspended from official quotation on the Australian Securities Exchange (ASX), Envestra generated a U.S.-dollar total return of 131%.

And Singapore-based Frasers Centrepoint Ltd. (Singapore: FCL) closed its AUD4.48-per-share deal for Australand Property Group, a March 2012 addition to the Conservative Holdings, on Oct. 31, 2014.

Our total return on Australand from its March 16, 2012, addition to the Conservative Holdings through Sept. 11, 2014, when it ceased trading on the ASX, was 77.4%.

Since we added it to the Portfolio on Jan. 20, 2015, Toll Holdings has generated a U.S. dollar total return of 41.2%.

Japan Post—the state-owned postal service—has sought to expand into faster-growing Asia-Pacific markets to offset weakness at home, where population growth is slowing and demand for traditional postal services is weakening.

Japan Post wants to use Toll’s expertise in the Asia-Pacific logistics business to help it expand internationally to diversify away from Japan’s domestic postal market.

Toll’s road, rail, air and shipping presence in Asia-Pacific and its experience forming relationships with multinational companies to manage their freight and logistics needs will augment the international parcel-delivery service Japan Post launched in 2014 through a joint venture with France-based GeoPost SA and Hong Kong–based Lenton Group Ltd.

It will also help it compete with global logistics giants such as United Parcel Service Inc. (NYSE: UPS) and FedEx Corp. (NYSE: FDX), and it will diversify its revenue sources and raise its enterprise value ahead of an initial public offering planned for later in 2015.

Toll has advised its shareholders to accept Japan Post’s offer of AUD9.04 a share, a 49% premium to its Feb. 17, 2015, closing price of AUD6.08.

Toll shareholders will also receive an interim dividend of AUD0.13 per share, declared along with the announcement of fiscal 2015 first-half financial and operating results.

The deal will be scrutinized by the Foreign Investment Review Board, though Australian Trade Minister Andrew Robb has already said it would “materially advance the national interest.”

Talking with The Australian, Robb also noted that the move by Japan Post demonstrated that Australia’s service -industries were “gold standard” and that it signals more deals with overseas companies to come in the wake of new free trade agreements with Japan, China and Korea.

We’re not in the business of speculating on mergers-and-acquisitions (M&A) action. We’re committed to finding and recommending dividend-paying stocks backed by high-quality Australian businesses.

It just so happens that there seems to be a similar appetite among heavy-hitting Asia-Pacific institutions.

Toll Holdings is a hold pending completion of its acquisition by Japan Post.

Conservative Update

Eight Conservative Holdings announced higher dividends during the recently concluded half-year earnings reporting season, five of them since the February 2015 issue of AE was published.

Last month we reported earnings and dividend growth for AGL Energy Ltd. (ASX: AGL, OTC: AGLNF, ADR: AGLNY), CSL Ltd. (ASX: CSL, OTC: CMXHF, ADR: CMXHY) and Telstra Corp Ltd. (ASX: TLS, OTC: TTRAF, ADR: TLSYY).

This month APA Group (ASX: APA, OTC: APAJF), M2 Telecommunications Group Ltd (ASX: MTU, OTC: MTCZF), Ramsay Health Care Ltd. (ASX: RHC, OTC: RMSYF), Sonic Healthcare Ltd. (ASX: SHL, OTC: SKHCF, ADR: SKHCY) and Wesfarmers Ltd. (ASX: WES, OTC: WFAFF, ADR: WFAFY) join the group of dividend growers.

Note that results for M2 Telecom, which boosted its interim dividend by 30.4%, are discussed in one of this month’s Sector Spotlights, which means it’s one of our two best ideas for new money right now. 

APA reported fiscal 2015 first-half normalized earnings before interest, taxation, depreciation and amortization (EBITDA) growth of 8.7%, while operating cash flow was up 21.5%. APA’s interim dividend was 3.9% higher than last year’s.

Management sees AUD300 million to AUD400 million of annual organic growth projects within APA’s existing asset base that, along with potential acquisitions such as the Australia-Pacific LNG pipeline, should keep its payout growing well into the future. APA Group is a buy under USD7.

Ramsay Health Care posted another set of blowout financial and operating numbers for its fiscal 2015 first half, as revenue was up 41.6% on acquisitions. Core net profit after tax (NPAT) rose 19.1%, while core earnings per share (EPS) were up 20.2%.

In addition to boosting the interim dividend by 19.1%, management lifted its full-year revenue and earnings guidance. Ramsay Health Care is now a buy under USD57.

Sonic Healthcare, which we added to the Portfolio in the January 2015 issue, posted a 6.1% increase in half-year revenue, as EBITDA was up 0.4% and cash from operations nudged up 4.8%.

Management expressed confidence that results for the second half of fiscal 2015 would be stronger as it boosted the interim dividend by 7.4%. Sonic Healthcare is a buy under USD17.

Finally, Wesfarmers raised its dividend by 4.7% on the strength of an 8.3% increase in net profit from continuing operations.

Its Coles supermarket unit and its Bunnings home-improvement chain posted strong growth. Wesfarmers is a buy under USD42.

Aggressive Update

Defying a rising chorus noting that its ramp-up of iron ore production in the face of crashing prices threatens ruin for both the industry and the company, BHP Billiton Ltd. (ASX: BHP, NYSE: BHP) followed through on a promise to ratchet up its capital management by raising its dividend 5.1%.

Underlying profit for the first half of fiscal 2015 was down 30.8% but still beat expectations.

Management continues to aggressively cut costs and rein in capital expenditure (CAPEX), which is freeing up cash flow for distribution to shareholders. BHP is a buy under USD33 on the ASX or USD66 on the New York Stock Exchange.

Other resource-focused names to increase their dividends include Oil Search Ltd. (ASX: OSH, OTC: OISHF, ADR: OISHY) and Woodside Petroleum Ltd. (ASX: WPL, OTC: WOPEF, ADR: WOPEY).

Both companies are passing on the benefits of successful launches of liquefied natural gas (LNG) projects over the past couple of years.

Output for Oil Search in 2014 surged by nearly 200% on the start-up of its Papua New Guinea LNG project. Sales volume was up 164%, driving a 110% increase in revenue and a 135% increase in core profit.

Management declared a final dividend of USD0.08 versus USD0.02 for the prior corresponding period and also declared a special cash dividend of USD0.04, as it fulfilled a plan to significantly boost its payout once PNG LNG started shipping gas and generating cash flow. Oil Search is a buy under USD9.

Woodside Petroleum, meanwhile, reported a 37.7% increase in 2014 NPAT, driven by continuing solid results from its Pluto LNG project. And it raised its dividend by 39.8%.

Management cut its 2015 CAPEX budget by 20% but maintained its full-year production target. Woodside Petroleum is a buy under USD42.

Much better skiing conditions at its Thredbo alpine resort and the opening of several new, innovative hotels helped Amalgamated Holdings Ltd. (ASX: AHD, OTC: None) post a 21.3% increase in first-half adjusted underlying profit.

Its Hotels & Resorts segment posted earnings growth of 24.2%, offsetting lackluster box office performance at its movie theaters in Australia, New Zealand and Germany. A strong film lineup for 2015 promises much better ticket sales during the second half and into fiscal 2016.

Amalgamated Holdings, which raised its dividend by 6.7%, is now a buy under USD10.

Note that 2014 results for Spark Infrastructure Group (ASX: SKI, OTC: SFDPF), which raised its dividend by 4.5%, are discussed in one of this month’s Sector Spotlights.

And we talk about Cardno Ltd (ASX: CDD, OTC: COLDF), which reduced its interim dividend by 31.6%, in this month’s Dividend Watch List column.