Join our community of smart investors

Howden Joinery cooks up dividend treat

RESULTS: Selling kitchens to local builders is throwing off plenty of cash for Howden, and shareholders are rewarded with a big dividend increase.
February 28, 2014

The huge dividend hike was the most striking thing about Howden Joinery's (HWDN) results. Flush with cash, Howden, which sells kitchens to small local builders, has made aggressive moves onto the dividend list over the past three years. The increase was underpinned by strong cash flows that drove the net cash level up 45 per cent over the year.

IC TIP: Hold at 381p

Besides splashing out on the dividend, Howden spent its cash on the depot network, adding 30 new depots last year and taking the total to 559. The group is not stopping there. It plans to add up to 30 more depots this year and sees scope to increase its network to over 700 depots in the longer term.

Revenue from Howden's UK depots rose 6 per cent on a like-for-like basis last year, with an acceleration in the growth rate in the second half to 10 per cent - roughly double that seen in the first half. Howden says the better trend has been maintained, with a similar run rate in the early part of 2014.

Underlying earnings per share rose 16 per cent last year to 16.3p - ahead of City expectations. JPMorgan Cazenove has nudged up its 2014 EPS forecast by 3 per cent to 17.5p.

HOWDEN JOINERY (HWDN)

ORD PRICE:381pMARKET VALUE:£2.4bn
TOUCH:380-381p12-MONTH HIGH:389pLOW: 189p
DIVIDEND YIELD:1.4%PE RATIO:24
NET ASSET VALUE:41pNET CASH:£141m

Year to 28 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2009770688.3nil
201080810111.1nil
201185411113.50.5
2012*88711214.03
201395713415.75.50
% change+8+19+12+83

Ex-div: 21 May

Payment: 20 Jun

*53-week period