Barratt Developments (BDEV) was relatively late to join the housebuilder party, only resuming dividend payments in 2013. However, since then, it's quickly made up ground. As well as a hike in the latest interim dividend, which followed a special 10p payment made last year, there will be another special dividend paid in November worth around 12.5p a share and another worth 17.5p a share the following year. This equates to a yield of 5.4 per cent, which puts Barratt up there with the top payers in the sector.
All of this has been made possible by the group's strong financial position. In fact, net cash is expected to rise to over £250m by June, boosted by the February sale of assets within the equity share programme for £82.9m in cash.
Trading during the first half of the year remained brisk; completions were up 9 per cent at 7,626, while average selling prices rose almost 11 per cent to £254,200. That helped lift operating margins from 14.2 per cent to 16.1 per cent, while the return on capital employed rose from 21.6 per cent to 25.5 per cent. The government's Help to Buy policy remains an important driver behind the sales, with a third of all completions using the scheme.
A total of 10,967 plots were acquired in the first half at a cost of £559m. Crucially, land price inflation remains benign, and Barratt was able to exceed its own internal hurdle rates of a 20 per cent gross margin and a 25 per cent return on capital. All in all, it expects to buy a total of around 18,000 plots during the current financial year. At the half-way stage, Barratt owned or controlled the equivalent of 71,956 plots as well as 11,492 acres of strategic land (equivalent to a further 74,600 plots). Around 92 per cent of the land bank is now higher-margin newer land.
Analysts at Peel Hunt are forecasting adjusted EPS of 53.4p for the year to June 2016, rising to 58.4p in FY2017.
| BARRATT DEVELOPMENTS (BDEV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 564p | MARKET VALUE: | £5.65bn | |
| TOUCH: | 563.5-564p | 12-MONTH HIGH: | 663p | LOW: 481p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 375p* | NET CASH: | £24m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 1.58 | 210 | 17.0 | 4.8 |
| 2015 | 1.88 | 295 | 23.9 | 6 |
| % change | +19 | +40 | +41 | +25 |
Ex-div: 28 Apr Payment: 20 May *Includes intangible assets of £892m, or 89p a share | ||||
