There’s no doubt that Britain’s decision to leave the EU has cast a cloud over the country’s robust housing sector.
FTSE 250 (INDEXFTSE: MCX) homebuilder Crest Nicholson (LSE: CRST), for one, remains 20% lower than levels seen just before June’s referendum. And this comes as little surprise as industry data following the vote remains very mixed.
Both the Halifax and the Office for National Statistics reported a sharp slowdown in annual house price growth in July, while the Bank of England noted that mortgage approvals hit 18-month lulls following the triggering of the Brexit button.
But data from Nationwide and Rightmove has showed property values resuming their upward path more recently. While the uncertainty created by June’s vote has dented first-time buyer demand to some degree, there’s also a slowdown in new properties hitting the market, keeping prices afloat.
A raft of positive trading updates since June has also lifted some of the gloom. While Crest Nicholson is yet to update the market following the vote, the likes of Barratt Developments and Persimmon remain upbeat over the strength of the market thanks to Britain’s historic homes shortage, while favourable lending conditions are also expected to persist.
With the long-term outlook largely intact, the City expects Crest Nicholson to keep furnishing investors with market bashing dividends. Rewards of 27.6p and 31p per share are pencilled-in for the years to October 2016 and 2017, up from 19.7p last year. These figures yield 5.8% and 6.5% respectively.
And robust dividend coverage of 2.2 times and 1.9 times for this year and next should satisfy even the most fearful of investors.
Toast terrific returns
Pub operator Marston’s (LSE: MARS) is also a solid dividend pick thanks to its strong popularity with Britain’s drinkers. And I expect revenues to keep clicking higher as its acquisition programme steams along — the firm is on course to open 28 new outlets in the current year alone.
The business advised in its latest update that like-for-like sales grew 2.5% during the 42 weeks to 23 July, with underlying food and drink revenues rising 2.1% and 2.6% respectively.
Indeed, Marston’s advised that “we have not seen any discernible impact on trading to date” following the Brexit vote, the company adding that “our focus on value and affordable treats is appropriate for current market conditions.”
Like Crest Nichsolson, Marston’s has a terrific record of lifting the dividend, and a payment of 7p per share for the period to September 2015 is anticipated to rise to 7.3p in the current period and to 7.6p in fiscal 2017.
Consequently Marston’s carries monster dividends of 5% for this year and 5.1% for next year. And expectations of sustained earnings progress means that the pub play sports dividend coverage of 1.9 times through to the close of 2017.
