Crest Nicholson boosts dividend

Other targets set at the time of the flotation have also been met well ahead of schedule, with completions in the year to last October up by 16 per cent at 2,530 homes. Average selling prices on open market homes rose by 15 per cent to £287,000, reflecting both price inflation and a change in the mix away from apartments. Crucially, the increase in selling prices more than offset higher raw material costs and wage inflation.

While finance director Patrick Bergin expects the increases in sales prices to moderate this year, pricing pressure on raw material costs is also likely to ease as manufacturers of crucial ingredients such as bricks increase output. Remarkably, there is little sign of a material increase in land prices. Historically, margins have been squeezed in boom times as land prices have risen, but there is no sign of this happening now, perhaps due to the constraints on bank lending. Crest also controls a very large land bank. Including so-called strategic land holdings - those lacking planning consent - it now has over 33,000 units in the pipeline. That gives a gross development value of over £9bn.

As part of the company's progressive dividend policy, the payout was more than doubled, reducing dividend cover from three to 2.75 times post-tax earnings. There is more dividend growth to come, however, as management gradually wants to reduce the cover to two times earnings. The analysts at Numis consequently expect the dividend yield to rise to around 8 per cent by 2017. They're forecasting pre-tax profit for the coming year of £142.7m and EPS of 44.7p.