Rising rentals: Buy these 3 FTSE build-to-rent dividend stocks

Highlights

  • According to the property portal Zoopla, average rents in the country outside the capital city increased by 5% in the last 12 months to the end of July and added more than £450 to a typical rent bill per year is the biggest ever increase since 2008.
  • Average rents in the country excluding London stood at £790 per month, an increase from the earlier £752 per year.
  • Legal & General, Grainger, & Savills are three major build-to-rent dividend paying stocks.

Private house rentals in the outskirts of London are growing at the fastest pace in 13 years. According to the property portal Zoopla, average rents in the country outside the capital city increased by 5% in the last 12 months to the end of July and added more than £450 to a typical rent bill per year is the biggest ever increase since 2008. Average rents in the country excluding London stood at £790 per month, an increase from the earlier £752 per year. Rents in Mansfield, Nottinghamshire, and Wigan, Greater Manchester, rose by over 10% annually, while East Sussex, Hastings, and Norwich increased by over 9%.

Here we take a look at 3 FTSE listed build-to-rent (BTR) dividend stocks in the UK and explore the investment prospect in them.

Legal & General Group Plc (LON: LGEN)

Legal & General Group is an asset management and financial services firm based in the UK. The company is a constituent of the FTSE 100 Index. Legal & General recorded an operating profit of £1,079 million, up by 14% year-on-year (H1 2020: £946 million). Net cash generated for the company stood at £0.9 billion in H1 2021, an increase of 14% year-on-year.

For H1 2021, Legal & General announced an interim dividend of 5.18 pence per share to shareholders, an increase of 5% over the previous year’s 4.93 pence per share.

The shares of Legal & General Group traded flat at GBX 276.60 at the close of trade on 7 September 2021. The shares of Legal & General Group gave a return of 34.21% in the last one year to shareholders, and the market cap of the company stood at £16,513.00 million.

Grainger Plc (LON: GRI)

FTSE 250 listed Grainger is one of the leading residential landlords in the UK with 9,109 operational rental homes and 8,851 homes in its £2.1 billion development pipeline. In July 2021, Grainger reached a record lease-up for Gatehouse Apartments, the company’s flagship BTR development based in Southampton. The company plans to deliver a total of 1,000 new homes this year. In June 2021, it acquired ‘The Forge’, a stabilised income-producing BTR asset that includes 283 rental apartments and a commercial unit on the ground floor.

Grainger recorded a net rental income of £34.7 million for six months ended 31 March 2021 compared to £37.0 million in the same period in the previous year. Its sales profit rose by 30% year-on-year to £29.6 million for six months ended 31 March 2021 compared to £22.8 million in HY 2020.

For the half-year ended 31 March 2021, Grainger announced an interim dividend of 1.83 pence per share to shareholders.

The shares of Grainger traded at GBX 333.80, down slightly by 0.36% at the close of trade on 7 September 2021. The shares of Grainger gave a return of 8.08% in the last one year to shareholders, and the market cap of the company stood at £2,483.01 million.

Savills Plc (LON: SVS)

Savills is an international provider of real estate services and is a constituent of the FTSE 250 Index. The company is engaged in offering specialised services for letting small to large-scale residential developments.

For H1 ended 30 June 2021, Savills recorded revenues of £932.6 million, up by £141.2 million or 18% compared to £791.4 million in H1 2020. The company’s profit before tax stood at £63.8 million, up by £56.1 million (H1 2020: £7.7 million). Its net cash (cash and cash equivalents) at the end of H1 2021 was £106.7 million compared to £9.4 million in H1 2020.

Savills announced an interim dividend payout of 6.0 pence per share to shareholders for H1 2021.

The shares of Savills traded at GBX 1,357.00, down by 1.45% at the close of trade on 7 September 2021. The shares of Savills gave a return of 64.48% in the last one year to shareholders, and the market cap of the company stood at £1,970.17 million.

 

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