Marston's - Income Pedigree

Marston’s: Another pub company that is enjoying the fruits of the UK consumer recovery. Whilst the lop-sided UK recovery (with services perkier than manufacturing) poses the same old long term macro-economic challenges, for food led pubs life is good. Yes, it rained in August and the Bank Holiday weekend didn’t happen, but there was a good summer and September was a good weather month. So Marston’s like-for-likes in the year to September 2014 were +3.1%, despite the late summer slowing. Marston’s is pushing ahead on several fronts, including more accommodation and new-build openings. They have a good range of formats including the budget conscious ‘Two for One’ through to the up market ‘Revere’ and the town centre ‘Pitcher & Piano’. Whilst competition for new sites is hotting up Marston’s has been playing this game for a while and has visibility on openings for the next three years at least. The board is experienced with well-regarded CEO Ralph Findlay having been at the group since 1996, becoming CEO in 2001. Net debt to EBITDA is of the order of 6x, not unusual in this asset backed sector. At 138p, with eps for September 2015 of 13p in sight, the multiple is a modest 10.6x. On a dividend payout of just over a half, a dividend of 7p equates to a tempting (and growing) yield of 5.1%. Unless you think that the UK consumer recovery is about to be curtailed abruptly after the 2015 general election, Marston’s looks like a stock that holds great attractions for income growth investors. (9th October 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 or e-mail at info@dividendpower.co.uk