Shaftesbury (SHB) & Topps Tiles (TPT) resume dividends: Buy alert?

Highlights 

• Shaftesbury’s loss after tax for the year ended 30 September was reduced to £194.9 million from the previous year’s £699.5 million.
• Topps Tiles’ revenue grew by 18.3% year-on-year to £228.0 million for the year ended 2 October 2021 compared to the previous year’s £192.8 million.

Today, two companies – Shaftesbury (LON: SHB) and Topps Tiles (LON: TPT) announced the resumption of dividend payments to shareholders after an improved full-year financial performance.

Landlords such as Shaftesbury, majorly dependent on non-essential goods retailers and hospitality firms are experiencing slow recovery after the COVID-19 lockdowns also, the prolonged ban on evictions has impacted commercial revenue streams and hit valuations. The company’s resumption of dividend payouts was however, driven by smaller annual losses and a predicted recovery of its core tenant base.

While home improvement product retailer – Topps Tiles registered a four-fold growth in full-year profits despite supply chain pressures, on account of strong demand from the increasing number of people renovating their homes and investing in home improvement during the pandemic, some of the other UK companies that have recently resumed dividend payouts after a sharp drop in the previous year include – Caffyns (LON: CFYN), BT Group (LON: BT.A), Mitie Group (LON: MTO), and AIB Group Plc (LON: AIBG).

Let us review in detail the investment opportunity in two FTSE stocks – Shaftesbury and Topps Tiles.

(Data source: Refinitiv and company release)

Shaftesbury Plc (LON: SHB)

Shaftesbury is an FTSE 250 listed real estate investment trust and commercial landlord. The company currently owns about 600 buildings in the heart of West End.

Shaftesbury’s loss after tax for the year ended 30 September reduced to £194.9 million from the previous year’s £699.5 million. The company’s net property income fell to £64.7 million during the period compared to £74.3 million in 2020.

Shaftesbury’s board announced a final dividend of 4.0 pence per share, bringing the total dividend for the year ended 30 September 2021 to 6.4 pence per share, driven by a recovery in the prospects of its tenant base from hospitality and fashion retail companies.

The shares of Shaftesbury are trading at GBX 624.00, down by 2.50% at 9:13 AM BST on 30 November 2021. The market cap of the company stands at £2,458.98 million.

Topps Tiles Plc (LON: TPT)

Topps Tiles is a UK-based tile retailer. Topps Tiles was experiencing high demand due to the booming home improvement market ever since the beginning of the pandemic. However, higher shipping costs and rising investments in inventory to avoid supply chain disruptions impacted profit margins.

Topps Tiles’ revenue grew by 18.3% year-on-year to £228.0 million for the year ended 2 October 2021 compared to the previous year’s £192.8 million. Its profit before tax for the period was £14.3 million, up from a loss of £9.8 million in 2020. The group recorded retail like-for-like sales, up by 19.6% during the period, driven by the expansion of the company’s product range with the introduction of new and innovative products.

Topps Tiles’ board announced a final dividend of 3.1 pence per share to shareholders for the year ended 2 October 2021.

The shares of Topps Tiles are trading at GBX 63.80, up by 1.92% at 9:16 AM BST on 30 November 2021. The market cap of the company stands at £122.33 million.