Berkeley Group - a smidge on the Pidge

Berkeley Group: Arguably unique amongst house builders, with Chairman Tony Pidgley, a doyen of the industry, presiding over a fierce capital discipline. Central to this discipline are the regular plans to return capital to shareholders by way of large dividends. This ‘in line’ Interim Management Statement confirms the payment of an already XD 90p dividend on 26^th September, with a further 180p due, as part of the September 2015 434p commitment. The next dollop is then 433p by September 2018, through a mixture of special and regular dividends. These are backed by Berkeley’s measure of £1.5bn of gross profit embedded in the land bank, (the market capitalisation is £3.25bn). Whilst cooling London trading conditions have been widely noted in the press, Berkeley Group are immensely experienced in riding the London market and are sounding as confident as ever. Digital Look have eps for April 2015 forecast at 232p, a PE of 10.3x at the recent share price of 2395p. The 180p of dividend due by September 2015 equates to a yield of 7.5%, whilst the 434p over the next three years averages out at a 6% annual yield. If you are happy that the London housing market may slow but will not burst, then this stream of special dividends is attractive. Being partly returns of capital, the visibility on these dividends (or any growth) beyond 2018 is hazy, but the fan club won’t care.  (3rd September 2014)

These comments are not a personal recommendation to deal. Any investments can fall as well as rise in value, so you could get back less than you invest. I may have a financial interest in some of the stocks written about. www.dividendpower.co.uk