Vistry Group PLC (LON:VTY), the FTSE 250 housebuilder, has said it will consider a dividend this year after strong sales and good cash generation since the end of coronavirus lockdown restrictions.
Profits in the year to end December 2020 will be at the top end of its £130mln-£140mln forecast, the group repeated again in a trading update, with net debt at the year-end to be no more than £40mln.
“Strong trading and low cancellations [and] good cash management at an individual business level” have driven the performance, it added.
“Given the strong cash performance and accelerated deleverage, the board will consider reinstating a modest final dividend in respect of the 2020 financial year, “ Vistry said in the statement.
The housebuilder added that all land for building next year has been acquired and it predicted a profit before tax of £310mln for 2021 and to be in a net cash position by the year-end.
Dividends in 2021 will reflect a policy of 2.5 times earnings cover, the group added.
Vistry noted that it has also repaid all furlough monies received earlier in the year
A trading update for the 12 months ended December 31, 2020 will be issued on January 12, 2021, it said.
Brokers impressed by cash performance
UBS points out that the forecast of £40mln net debt at the year-end compared to November guidance of below £230-250m.
The land bank remains at 3.5-4 years of housing completions, which explains the high level of cash generation.
Peel Hunt adds that Vistry shares have bounced sharply in the last month but remain one of the weakest performers in the sector even with a 5.3% dividend yield.
Given they have been struggling this year on debt/new equity worries, this update should provide yet more comfort for investors, said Peel Hunt, adding the shares are very cheap in a sector context, especially given the growth prospects for the Partnerships business.
Shares rose 4.4% to 901p.
— adds share price, broker comment —