AUS
NZ
UK
CA
USA
IND
When a stock listed on the ASX 200 outperforms the market by returning over 14% per annum for five consecutive years, it grabs the attention of investors. Considering that the average return of an S&P/ASX 200 Index (AS: XJO) fund over the same period has been around 9% per annum, anything exceeding that mark is considered a significant achievement in the realm of active investing. Brickworks Ltd (ASX: BKW), a construction materials manufacturer, is one such ASX 200 stock that has caught the eye of investors with its remarkable performance.
Over the past five years, Brickworks' share price has soared from just over AU$16.50 to its current standing at AU$26.86, delivering an impressive return of 63% or 10.27% per annum. When factoring in the dividends issued by Brickworks, estimated to contribute an additional 4% per annum, the total shareholder return climbs to approximately 14% per annum. Considering the typical franking credits attached to Brickworks' dividend payments, this return could be even higher, making it an enviable investment for shareholders.
So, what sets Brickworks apart and allows it to outshine the market? The answer lies in its multifaceted business model, which extends far beyond its core manufacturing of construction materials. While the company's primary focus remains on producing tiles, masonry, and bricks, Brickworks has strategically diversified its revenue streams over the years to fortify its earnings base and mitigate the cyclical nature of the construction industry.
One key aspect of Brickworks' success is its significant investment in property. Leveraging its expertise in identifying areas experiencing robust residential and industrial construction, Brickworks strategically locates its manufacturing facilities near these burgeoning neighborhoods to minimize transportation costs. As these areas develop, Brickworks capitalizes by either enhancing the value of its land parcels through development or selling them for profit, thereby bolstering its financial performance.
Furthermore, Brickworks boasts a substantial investment portfolio, highlighted by its 26.1% stake in ASX 200 investment house Washington H. Soul Pattinson and Co Ltd (ASX: SOL). This strategic partnership has proven immensely lucrative for Brickworks, as Soul Pattinson's consistent success and dividend growth have significantly contributed to Brickworks' financial gains. In its recent half-year report, Brickworks revealed a notable increase of AU$140 million in its investment portfolio, underscoring the profitability of this diversified approach.
In essence, Brickworks' success as an ASX 200 market-beating stock can be attributed to its diverse earnings base and astute business strategies. Shareholders can undoubtedly anticipate continued prosperity in the years ahead, driven by Brickworks' commitment to innovation and sustained growth across its various business segments.
