REA share price marches higher on record final FY22 dividend

The REA Group Limited (ASX: REA) share price is marching higher in early trade, up 2.4%.

This comes after the global online real estate advertising company released its results for the financial year ending 30 June (FY22).

REA share price gains on strong results

• Revenue increased 26% year on year to $1.17 billion
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $674 million, up 19% from FY21
• Net profit increased 25% from FY21 to $408 million
• Full year fully franked dividend of $1.64 per share, up 25% year on year
• Earnings per share (EPS) of $3.08 increased 25% from FY21

What else happened during the 2022 financial year?

The big leap in dividends that could be helping boost the REA share price today was driven by a record final dividend payment of 89 cents per share, fully franked. The ex-dividend date for that payout is 25 August with a payment date of 15 September.

Dividend payouts were helped by strong revenue growth, which REA reported was reinforced by a 24% lift in its Australian Residential revenues.

Core operating costs were also well up year on year, with the 34% increase mostly due to the company’s acquisitions of Mortgage Choice and REA India. Without those acquisitions core operating costs were up a more modest 11% year on year. REA cited higher labour costs alongside marketing investments for the increase.

The company’s free cash flow generation of $394 million was up 55% from FY21.

What did management say?

Commenting on the results for the 2022 financial year that look to be driving the REA share price higher today, REA’s CEO, Owen Wilson said:

FY22 has been an exceptional year for REA. The record take up of our premium listings products enabled us to fully capitalise on the buoyant listings environment, and it demonstrates the value we provide to our customers and vendors.

Key milestones were also achieved in our property data, financial services and Indian businesses, building strong momentum. These markets present great opportunities and the revenue contribution of these businesses is growing rapidly.

What’s next?

Looking ahead to what could impact the REA share price in FY23, the company expects increasing interest rates to see the Aussie residential property continue to moderate. However, it noted demand should be supported by record low unemployment, high household savings and increasing migration.

REA is targeting full year positive operating jaws for Australia, and forecasts operating cost growth will be in the mid to high-single digits for FY23.

“While we’re mindful of changing economic conditions, with further interest rate rises expected, Australia’s property market is healthy and supported by strong underlying fundamentals,” Wilson said.

REA share price snapshot

The REA share price has struggled this year, down 25% since the opening bell on 4 January. That compares to a year-to-date loss of 7% posted by the S&P/ASX 200 Index (ASX: XJO).

The post REA share price marches higher on record final FY22 dividend appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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