Barratt Developments hikes dividend as profits fly

Barratt Developments hiked its dividend by a quarter after the housebuilder's profits mushroomed in the first half of the year.

The FTSE 100 construction group generated £295m pre-tax profit in the six months to the calendar year end, an increase of 40.3% on revenues that rose 19% to £1.88bn.

Earnings per share were 40.6% higher at 23.9p.

Cash generation remained strong, with the group expected to have a net cash balance of more than £250m at the June year end.

So directors were confident to lift the interim dividend to 6p, up 25% on last year's, and trumpet that they expect the capital return plan to generate a special cash payment of £125m with full year results, or 30.5p in total for the year, plus for 2017 a further 37.3p in total.

This equates to a return over the next two years of around £678m of cash through ordinary dividends and special cash payments, or a total of 67.8p per share - slightly more than most analysts were expecting.

For the first half of the current financial year, the group had already indicated in a trading statement last month that it increased the number of house completions by 9.4% and enjoyed a 10.8% increase in the average selling price.

Barratt said it had made a "strong start" to the second half, though 260 net private reservations per week was down on the exceptional 279 from last year, though the rate of 0.71 reservations per active site per week was flat.

The land market was also continuing to remain attractive, with 10,967 plots of land worth a total of £559m approved for purchase.

Chief executive David Thomas said: "In line with our strategy, we have stepped up the number of completions in the first half and we did this in a disciplined way, both financially and operationally, without compromising on the quality of the homes we're building.

"In the past five years we have increased our annual output by more than 53%, built more than 71,7001 homes and approved the investment of over £4.4bn in new land for housing.

"The market remains strong as a result of improved mortgage availability and Government support for first time buyers and we will continue to grow in a way that delivers for the needs of homebuyers and shareholders alike."