Brickworks has maintained or grown its dividend every year for 46 years. Here’s the latest

The Brickworks Limited (ASX: BKW) share price isn’t doing much after the business released its FY22 result. But, the business’ dividend could capture some investor attention because of how reliable it has been over the long term.

The building products business reported a statutory net profit after tax (NPAT) of $854 million (up 257%). It also declared a record underlying net profit from continuing operations of $746 million (up 159%).

Brickworks’ board decided on a final dividend per share of 41 cents per share, which was an increase of 3%. Its total full-year dividend went up by 3% as well, to 63 cents per share.

Brickworks’ enviable dividend record

The business told investors that with these latest dividends, its normal dividend has been maintained or increased every year since 1976.

Brickworks boasted about its “long history of dividend growth”. The company said it has been 46 years since the normal dividend was last decreased.

Referencing the company’s dividends and capital management, Brickworks chair Robert Millner said:

We are proud of our long history of increasing dividends, which we have maintained or increased for 46 years. This is a testament to our strong financial position, prudent capital management and our diversified business model.

Despite our significant investment program over the past few years, our borrowing level remains conservative. Net debt declined by $25 million during FY2022 to finish the year at $493 million, with gearing of 15%.

How does Brickworks pay for its dividend?

Brickworks pays for its dividend with the cash flow from its investments division and property trust.

In FY22, the business paid $94 million of dividends and it generated total operating cash flow of $130 million.

Within that total, Brickworks received net trust income from the property trust of $36 million (up 17%). And the dividends received from its investments division rose by 5% to $61 million. Those two elements combine to a total of $97 million, covering the dividends paid entirely.

Further growth of the rental profit from its property trusts and the rising dividends from its investment division could help grow the Brickworks dividend, particularly as the company completes more properties within the industrial property trust.

What is the dividend yield?

Based on the annual payout of 63 cents per share, the current Brickworks share price offers a grossed-up dividend yield of 4.2%.

How has the result been received?

While investors haven’t pushed up the Brickworks share price, analysts thought the result is a good one.

According to reporting by The Australian, analyst Suraj Nebhani from the broker Citi thought the result was a “massive consensus beat” thanks to the property division.

The analyst noted that uncertainty is rising, though Brickworks is confident about growth within the property business in FY23. However, the rising interest rates could impact future property profits.

The post Brickworks has maintained or grown its dividend every year for 46 years. Here’s the latest appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Tristan Harrison has positions in Brickworks. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. 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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