Forty-nine companies under How They Rate coverage raised dividends during the recently concluded earnings reporting season Down Under.

Most Australian companies’ fiscal years run from Jul. 1 to Jun. 30. They typically report earnings twice a year, in February and August. Most also declare dividends when they announce earnings–interim dividends when they report fiscal first-half results in February, final dividends when they report full-year results in August.

Dividend growth is not an infallible measure of company health, but it’s pretty good. Boosting a payout is management’s best commentary on the ability of its underlying business to continue to grow.

Dividend growth does not necessarily translate into immediate share-price appreciation, either, a point Roger Conrad explores vis-à-vis the 14 AE Portfolio Holdings that have raised distribution during the preceding 12 months, either an interim or a final payout. But over the long term a rising dividend is the best indication of a company’s ability to grow revenue and earnings.

And it’s a pretty good way to build wealth for investors as well.

Let’s start with an exception, iron ore producer Fortescue Metals Group Ltd (ASX: FMG, OTC: FMGUF, ADR: FSUGY).

In the table “Up with Payouts” Fortescue is shown with a 14.3 dividend increase from fiscal 2011 to fiscal 2012. Fortescue boosted its fiscal 2012 interim dividend to AUD0.04 per share after paying AUD0.03 per share for its 2011 interim dividend. Its 2012 final dividend was flat with its 2011 final dividend at AUD0.04 per share. But the 2012 full-year dividend of AUD0.08 per share was 14.3 percent higher than the AUD0.07 paid in fiscal 2011.

This double-digit increase is a sad siren today, as shares of the company have been placed in “Trading Halt Session State” at its own request, pending the release of an announcement by management.

According to the request submitted to the Australian Securities Exchange (ASX):

Fortescue remains concerned about continued rumours and speculation in respect of its bank related facilities. Discussions with its banks have progressed significantly overnight and it is in the best interests of shareholders to halt trading in Fortescue’s securities.

Fortescue re-iterates its announcement from yesterday that it is in compliance with its banking covenants and is conducting discussions with its supportive banking group.

It is the Company’s intention to be able to make an announcement in respect of the restructure of its bank related facilities on or before commencement of trading on Tuesday 18 September 2012.

Unless the ASX decides otherwise, Fortescue shares will remain halted until the earlier of the commencement of normal trading on Tuesday, Sept. 18, or when the promised announcement is released to the market.

Fortescue is saddled with AUD10 billion of debt. The highly leveraged iron ore producer has asked its lenders to give it some breathing space by waiving all its debt covenants for the next 12 months. But they’re likely to demand something in return, and it won’t be cheap.

There are many reports circulating in the financial media, including: that Fortescue will attempt to sell a 15 percent stake in the company to China’s Baosteel over the weekend, which at the rumored asking price of AUD4 per share–a significant premium to Friday’s closing price–would mean a cash infusion of AUD2.15 billion; that “Fortescue is in late-stage talks about selling a minority stake in a future hematite development project”; and that “Fortescue boss Andrew Forrest is in talks with Kerry Stokes’s company Westrac over a billion dollar sale and leaseback deal to save his iron ore empire.”

Fortescue now finds itself on another list, the AE Dividend Watch List, due to the continuing decline in iron ore prices as well as an onerous debt burden. The stock is a hold.

Here’s a look at six companies in four AE How They Rate coverage sections that recently announced higher dividends and whose prospects aren’t as dire as those of Fortescue.

Note that Health Care denizen Ramsay Health Care Ltd (ASX: RHC, OTC: RMSUF), Australia’s largest operator of private hospitals, raised its full-year fiscal 2012 dividend by 15.4 percent and is now a member of the AE Portfolio Conservative Holdings. Read more about Ramsay in this Sector Spotlight.

Basic Materials

Mineral processing services outfit Sedgman Ltd (ASX: SDM) has a couple serious strikes against it. One of its key functions is the design, construction and operation of coal handling and processing plants (CHPP). With its new carbon tax Australia is most definitely moving away from coal as a fuel source for electricity generation in favor of natural gas.

Its CHPP business means it’s also heavily exposed to the resources capital cycle. It has an approximately 50 percent market share of CHPP projects in Australia, but the design and construction of new coal plants is not exactly a growth niche Down Under.

The stock is down 27.7 percent in US dollar terms, including dividends, in 2012, suggesting the market is pricing in these drawbacks, and then some.

On the other hand, it processes approximately 26 metric tons per year of coal under seven operations contracts, suggesting it has meaningful exposure to production in addition to the capital cycle.

It’s also embarked on a plan to diversify its exposure, a “strategy to replicate [its] coal business in metals sector.” Sedgman is currently delivering metals projects in Australia and Africa. It recently competed a USD100 million engineering, procurement and construction (EPC) contract at the Boseto Copper Project in Botswana. And Sedgman metal operations within Australia are processing 10 metric tons per year of ore.

It’s also tied to major heavyweights such as BHP Billiton Ltd (ASX: BHP, NYSE: BHP), Rio Tinto Ltd (ASX: RIO, NYSE: RIO), Glencore International Plc (London: GLEN, OTC: GLCNF, ADR: GLNCY), Xstrata Plc (London: XTA, OTC: XSRAF, ADR: XSRAY) and Vale SA (Brazil: VALE3, NYSE: VALE).

The stock closed as high as AUD2.49 on the Australian Securities Exchange (ASX) this year but has come down on concern about slowing mining and resources investment due to persistent global economic fear.

It reached a low of AUD1.01 on Sept. 6 but has bounced back as speculation about more Chinese stimulus and another round of quantitative easing–not to mention the surprisingly aggressive approach Ben Bernanke described in his Sept. 13 press conference–from the US Federal Reserve have become reality.

Sedgman had already announced, on Aug. 23, a 45.4 percent increase in net profit after tax for the 12 months to Jun. 30, 2012, to AUD37.8 million. Revenue increased to AUD650.8 million from the AUD555.1 million in fiscal 2011, while underlying earnings before interest, taxation and amortization (EBITA) rising 50.5 percent to AUD64 million from AUD42.5 million, in line with expectations. Underlying earnings per share increased to AUD0.20 6, up from AUD0.148 in fiscal 2011.
Sedgman declared a final dividend of AUD0.065 per share, up 62.5 percent from the AUD0.04 paid as a final dividend for fiscal 2011. Its total fiscal 2012 dividend of AUD0.11 per share is up 57.1 percent from fiscal 2011, making it the second-biggest dividend raiser among How They Rate companies that announced earnings during the August reporting cycle.

Only Redflex Holdings Ltd (ASX: RDF, ADR: RFLXY), with a 60 percent increase, tops Sedgman. Redflex, which manufactures and distributes traffic violation systems and hardware, paid an interim dividend for the first time in fiscal 2012.

Sedgman is not for the faint of heart. And it did reduce its dividend during the Great Financial Crisis. But it’s back to dividend growth mode, evidenced by the fact that its fiscal 2012 final dividend is the highest it’s ever paid. Sedgman is a buy for aggressive investors up to USD2.60.

Ausdrill Ltd (ASX: ASL), a company we recommended in last month’s In Focus feature as one of our favorite non-Portfolio companies, paid a fiscal 2012 dividend that was 13 percent higher than what it paid in fiscal 2011.

Ausdrill offers an integrated mining solution, with its core business being hard rock surface mining services under three- to five-year contracts with long-standing customers.

Along with full-year results Ausdrill announced a 23.1 percent increase to its final dividend to AUD0.08 from AUD0.065 a year ago; its fiscal 2012 interim dividend, announced in late February, was AUD0.065, up from AUD0.055 a year ago. Management has never cut the payout, even during the Great Financial Crisis.

Ausdrill’s fiscal 2012 revenue surged 27 percent to AUD1.059 billion, while statutory net profit after tax (NPAT) was up 53 percent to AUD112.2 million. Cash from operations of AUD156.8 million was ahead of analysts’ expectations, despite an extra AUD71 million investment in working capital for growth. The company also spent AUD270 million on acquisitions during the year.

Reported earnings before interest, taxation, depreciation and amortization (EBITDA) and EBIT margins improved to 27.2 percent from 23.4 percent and 16.3 percent from 13.5 percent, respectively.

As of Jun. 30, 2012, Ausdrill had net debt of AUD240 million, with AUD124 cash on hand. Net debt-to-equity at the end of the fiscal year was 32 percent.

In late August Ausdrill announced it had reached an agreement to buy Best Tractor Parts Group for AUD165 million through its subsidiary Ausdrill Mining Services. The deal is expected to close by Oct. 31, 2012.

Managing Director Ron Sayers described the acquisition as “strategic move” that would create new revenue streams. “It will enable us to grow our hire fleet from 117 to 194 vehicles, enhance our maintenance capabilities and captures additional opportunities to build relationships with blue-chip customers,” said Mr. Sayers during a conference call to discuss the transaction.

For the financial year ended Jun. 30, 2012, Best Tractor generated revenue of about AUD176 million and earnings before interest, tax, depreciation and amortization of about AUD50 million.

The acquisition will be funded with debt, which will drive Ausdrill’s net debt-to-equity ratio close to 50 percent high by historical standards but manageable in light of the company’s solid cash flow generation. Ausdrill will likely look to add more assets during this time of distress for mining services companies that aren’t as well-placed.

Ausdrill has work in hand based on signed contracts and letters of intent worth approximately AUD2.5 billion, and management noted again during its discussion of fiscal 2012 results that “tendering activity remains high,” particularly in West Africa.

Without considering the impact of the Best Tractor acquisition Ausdrill forecast fiscal 2013 revenue growth of approximately 15 percent and that it would maintain similar EBITDA and EBIT margins.

Ausdrill’s roster of customers includes resources giants such as BHP, Rio Tinto, Barrick Gold Corp (NYSE: ABX) and Newmont Mining Corp (NYSE: NEM). Large and long-standing clients account for more than two-thirds of Ausdrill’s revenue. It has a growing fleet of more than 700 drill rigs, trucks, loaders and excavators and a significant amount of ancillary equipment.

The company recently received a letter of intent for a five-year, USD540 million contract award for work at Mali’s Syama gold mine, its largest single deal ever.

It’s a perilous time to pick winners in the resources space. But companies with high exposure to production as opposed to the capital-investment cycle; with blue-chip clients under long-term; and with records of performance over time are solid bets. Ausdrill, based on its operating results, meets all these criteria.

The stock sagged from a multi-month high on the Australian Securities Exchange (ASX) of AUD3.59 on Aug. 20 to a low of AUD2.65 on Sept. 5 but has surged this week to AUD3.06.

Ausdrill is a buy under USD3.80 on the Australian Securities Exchange (ASX) using the symbol ASL.

Like Ausdrill MACA Ltd (ASX: MLD) is a solid mining services company with long-term relationships with big-name resource producers around the world. MACA offers contract mining, civil earthworks, crushing and screening and material haulage primarily for iron ore and gold mining companies.

MACA boosted its full-year dividend 33.3 percent to AUD0.08 per share for fiscal 2012 from the AUD0.06 per share it paid in fiscal 2011. It raised both its interim and its final dividend year over year, announcing the latter increase along with full fiscal 2012 results on Aug. 27.

MACA reported fiscal 2012 net profit after tax of AUD37.7 million, beating analysts’ expectations. Earnings before interest, taxation, depreciation and amortization (EBITDA) was strong in the second half, AUD49.5 million versus AUD35.2 million in the first half, and margins were slightly better, 25.7 percent versus a fiscal 2011 second-half figure of 24.9 percent.

Operating cash flow in the second half was AUD35.2 million, up from AUD17.7 million in the first; for the year MACA generated AUD52.8 million. Revenue for fiscal 201 was up 34.4 percent to AUD334.9 million, while EBITDA for the year was up 31.6 percent to AUD86.3 million. EBITDA margin for the year was 25.8 percent.

MACA boasts an order book of AUD1.3 billion, with an average contract length of three years but with many much longer than that. That’s down from AUD1.4 billion as of Jun. 30, 2011.

The balance sheet is healthy, with net debt of AUD15 million, includingAUD39.9 million in cash and AUD54.8 million in debt. Net debt-to-equity is just 13 percent as of Jun. 30, 2012.

Management is targeting more than AUD400 million of revenue for fiscal 2013.

Like Ausdrill, MACA offers a high degree of earnings visibility, with a strong order book and longstanding relationships with key clients. This opens doors to more long-term mining opportunities. It also has a high degree of production exposure versus capital-cycle exposure.

This week the company announced the appointment of Doug Grewar as its new CEO and Managing Director, removing another bit of uncertainty. Mr. Grewar was most recently General Manager Mining for Abigroup Mining Services. He has more than 15 years direct experience in the mining industry working for some of Australia’s largest mining contractors as well as 10 years in the heavy construction materials industry in management and senior leadership roles. He also has past experience as the managing director of an ASX-listed company.

MACA is a buy under USD2.30 for investors who trade directly on the ASX.

Industrials

Bradken Ltd (ASX: BKN, OTC: BRKNF), which manufactures and supplies equipment and materials to the mining, rail and industrial sectors, posted solid fiscal 2012 results, with earnings before interest, taxation, depreciation and amortization (EBITDA) up 12 percent to AUD220.4 million and net profit after tax up 15 percent to AUD100.5 million, both figures beating management guidance.

It also boosted its interim distribution in February 2012, from AUD0.0185 for fiscal 2011 to AUD0.195, and its final distribution in August, from AUD0.21 a year ago to AUD0.215. All told Bradken boosted its payout 3.8 percent from fiscal 2011 to fiscal 2012.

Management says the company’s order book is at a record but also stressed that earnings visibility beyond the first half of fiscal 2013, which commenced Jul. 1, is “limited due to global economic uncertainty.”

It has no direct exposure to commodities prices, though it clearly is sensitive to activity in the mining sector. It has no debt maturities through 2013, and its overall debt burden is low relative to total assets and coming down.

Management noted during its fiscal 2012 conference call that the company had gotten past a couple troubled contracts for the provision of rail wagons and that it had made significant progress with a new ground engaging tool for the mining industry that it developed in-house and so promises higher margins once it’s rolled out on a wider geographic basis.

The stock has come well off its 2012 high near AUD8.60 on fear about global economic growth and the fate of Australia’s mining/resource boom, but recent dividend increases are pretty solid indications of management’s confidence.

Bradken did cut the dividend in 2009 and 2010, and the share price has suffered significant declines during those periods when fear has been highest. But the track record of execution is solid, and management does a nice job with the finances.

Though concerns about the condition of the global economy abound, commodity demand remains strong. This demand is underpinned by the development and industrialization of the developing world and is driving prices and production higher. Bradken’s position on the production side of mining operations–as well as its global manufacturing platform, its product lines, its ability to research and develop its own products and solutions and its solid balance sheet position it to grow revenue, earnings and dividends. Bradken is a buy under USD8 on the ASX.

Oil and Gas

Woodside Petroleum Ltd (ASX: WPL, OTC: WOPEF, ADR: WOPEY), as forecast in last month’s In Focus feature, boosted its interim dividend from AUD0.55 for the first half of 2011 to AUD0.65 for the first half of 2012, an increase of 18.2 percent.

Management also boosted annual production guidance due to a strong start for its Pluto LNG project, which turned out first gas last spring. Woodside now expects calendar 2012 output to be 77 million to 83 million barrels of oil equivalent, up from previous guidance of 73 million to 81 million. Production in 2011 was 64.6 million barrels of oil equivalent.

Once thought to be a trouble spot because of cost blowouts and construction delays, Pluto catalyzed a 43 percent increase in second-quarter oil and gas production to 20.1 million barrels of oil equivalent. Pluto came online in March at a final cost of AUD14.9 billion, following three costly delays. It produced its first LNG in April and began shipping its first cargos to fuel-hungry Japanese utilities early in May.

Woodside reported a 1.9 percent decline in net profit after tax to USD812 million for the six months through Jun. 30, the shortfall largely was due to the company being forced to buy cargoes of liquefied natural gas (LNG) to fulfill contracts with Japanese customers after an earlier delay to commissioning Pluto.

Underlying profit was up 4.5 percent to USD865 million in the first half.

Woodside has had some trouble on the exploration front, announcing along with its dividend increase and first-half earnings that its work at Ananke-1 focused on gas for expanding Pluto was unsuccessful.

Management, however, was confident enough in its ability to source third-party gas to feed Pluto to raise the dividend aggressively. Woodside is a buy under USD38.

Utilities

Spark Infrastructure Group (ASX: SKI, OTC: SFDPF) holds 49 percent interests in three separate power companies: SA Power Networks, which was formerly known as ETSA Utilities, CitiPower and Powercor Australia.

SA Power is South Australia’s only significant electricity distributor, delivering electricity to over 825,000 customers over an area of approximately 178,200 square kilometers. CitiPower owns and manages the electricity distribution network servicing Melbourne’s central business district (CBD) and inner suburbs, delivering electricity to more than 300,000 customers. Powercor owns and manages the largest electricity distribution network in Victoria, delivering electricity to approximately 722,000 customers across 65 percent of the state.

The other 51 percent interest in each of SA Power, CitiPower and Powercore is held by Cheung Kong Infrastructure and Power Assets Holdings, which are part of the Cheung Kong Group, one of Hong Kong’s leading multinational conglomerates.

Spark has delivered a solid distribution, supported significant organic growth in its assets and explored external opportunities consistent with its strategy and risk profile during this period of global economic uncertainty.

Over the past couple years Spark has internalized its management structure, increased its financial flexibility, simplified its corporate structure and established a sustainable and growing distribution profile–with the payout fully supported by operating cash flows.

Regulated revenue was up 19.1 percent to AUD805.8 million, with aggregated EBITDA up 16.3 percent to AUD635.2 million. Flat electricity sales volumes and working capital timing issues were offset by higher distribution tariffs.

SA Power had to fund the impact of the Solar Photo-Voltaic Feed-in tariff scheme implemented by the South Australian government, where demand for that scheme has far exceeded their expectations. Significant tariff increases are in effect in South Australia as of Jul. 1, 2012, which should drive cash flow higher in the second half of the year.

All three companies should benefit from the recovery of revenues related to regulator-approved growth capital spending for network improvements, security supply, the rollout of smartmeters and other efforts to improve service for customers.

All three also continue to invest in the renewal and expansion of their networks to maintain and, where possible, enhance asset performance and reliability. In first half SA Power, CitiPower and Powercor invested a total of AUD368.9 million, a 4.6 percent increase from the prior corresponding period. The Australian Energy Regulator (AER) has approved capital expenditure over the current five-year regulatory periods, which will drive growth in the Regulatory Asset Bases (RAB) of the respective companies at 8 percent per year.

Deleveraging will also reduce the ratio of net debt-to-RAB toward 75 percent at the operating company level by the end 2015.

Along with its first-half earnings announcement Spark reaffirmed its previous full-year distribution guidance for 2012 of AUD0.105 per security. The board approved and management declared a cash distribution of AUD0.0525 per security for the six months to Jun. 30, 2012, up 10.5 percent from the AUD0.0475 paid as an interim dividend in 2011.

The company also reiterated its medium-term distribution growth target range of 3 percent to 5 percent per year to 2015, “subject to business conditions.” Spark has a target payout ratio of approximately 80 percent of cash flow through 2015.

Spark Infrastructure, which is yielding 6.6 percent at current levels, is a buy under USD1.60.