Photographer: Simon Dawson/Bloomberg

Homebuilder Barratt Rises on $436 Million Special Dividends Plan

  • Investors have been drawn to homebuilders by dividends: Davy
  • Barratt has been increasing construction outside London

Barratt Developments Plc rose to the highest since the day of the Brexit vote after the company said it plans special dividends of 175 million pounds ($218.2 million) this year and again in 2018.

Pretax profit in the six months through December rose 8.8 percent to 321 million pounds ($401 million), the Coalville, England-based company said in a statement on Wednesday. The shares rose as much as 3.7 percent and were up 2.3 percent at 527 pence at 8:47 a.m. in London trading.

David Thomas

Source: Barratt Developments Plc

“After reporting record first-half profit, and with forward sales at a record high, current trading conditions make us confident that full-year completion volumes will be up year on year,” Chief Executive Officer David Thomas said in a telephone interview. “This is allowing us to focus on our capital returns program.”

Barratt has been increasing home building outside of London as demand for homes in the city slows. Completions outside of the U.K. capital reached the highest in nine years last year, the firm said. Davy analyst Colin Sheridan estimates the company will return around 400 million pounds to investors in each of the next two years, about 10 percent ahead of the broker’s current forecast.

“The enhancement of the capital returns plan will be a positive to many investors who have been moving to this sector for the attractive dividend yields,” Sheridan wrote in a note to clients.

Barratt’s forward sales reached 3.02 billion pounds on Feb. 19, up 17 percent from a year earlier, according to the statement. That figure includes joint ventures.

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