Strong cash generation allowed funeral services provider Dignity (DTY) to return yet another chunk of money to shareholders last year - the third such distribution since it listed a decade ago. The 108p a share payout last August, added to the final dividend of 11.83p, equates to a juicy 8 per cent yield.
The other big development last year was the acquisition of Yew Holdings in January 2013, which flattered Dignity's underlying operating profit, up 13 per cent at £78.4m. Yet higher income per funeral, cost control and top-notch client service also contributed to the outperformance, helping to offset a 1.1 per cent like-for-like fall in the number of funerals performed (despite an increase in the UK death rate). In fact, strip out acquisitions and profit in the funeral services division grew 6 per cent to £57.7m, while profit from the cremation division jumped 13 per cent to £26.4m.
Dignity also secured 39,000 new prearranged funeral plans. That brought the total to 323,000 by the year-end, representing a guaranteed future income stream. Meanwhile, the start to the current year has been quiet, with the number of deaths down 5 per cent. Peel Hunt nonetheless expects pre-tax profits of £56m, giving EPS of 80.9p (up from 72.1p).
DIGNITY (DTY) | ||||
---|---|---|---|---|
ORD PRICE: | 1,502p | MARKET VALUE: | £802m | |
TOUCH: | 1,499-1,504p | 12-MONTH HIGH: | 1,570p | LOW: 1,277p |
DIVIDEND YIELD: | 0.8% | PE RATIO: | 21 | |
NET ASSET VALUE: | 79p* | NET DEBT: | £370m |
Year to 27 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2009 | 185 | 37.5 | 41.8 | 12.1 |
2010 | 199 | 39.8 | 46.9 | 8.88 |
2011 | 210 | 40.3 | 62.6 | 14.6 |
2012 | 230 | 45.4 | 65.1 | 16.1 |
2013** | 257 | 49.6 | 72.8 | 11.83 |
% change | +12 | +9 | +12 | -27 |
Ex-div: 21 May Payment: 27 Jun *Includes intangible assets of £250m, or 469p a share **Does not include return of cash of 108p a share paid in August 2013 |