MENU

Why the DuluxGroup Ltd share price just hit a record high

The DuluxGroup Ltd (ASX: DLX) share price hit a record high of $7.18 this morning in a result I suggested was on the cards after the group recently painted a pretty picture for investors with its half-year results ending 31 March 2017.

The group lifted net profit 14.2% to to $72.2 million for the half-year period, with the dividend up 13% on a payout ratio of 70% of net profit after tax. The group is forecasting that full year profit for FY 2017 will be above 2016’s result to continue a streak of unbroken profit and dividend growth since 2011.

Dulux has been a beneficiary of rising household wealth in Australia as rising property prices have encouraged spending on home renovation works, with the long-term outlook for Australian property prices remaining as solid as ever.

Arguably the painting of residential property is more of a consumer staple than consumer discretionary spend and Dulux’s dominant market position via its premium branded products and wide distribution networks arguably provides it a narrow moat.

The stock has climbed 145% over the past five years and trades at $7.18 on around 20x analysts’ estimates for 36 cents in earnings per share over FY 2017. Analysts are also estimating total dividends in the region of 26 cents over the year, which would offer a fully franked yield around 3.6%.

However, Dulux’s net debt stands at 1.5x EBITDA which means the share price is no bargain, despite the reasonable growth outlook. As such it’s one I’m keeping on the watch list given there are businesses of similar quality available at much cheaper valuations in my opinion.

One that comes to mind is this Dividend Stock with a 6.7% Gross Yield...

FREE REPORT! Click here to discover the Motley Fool's #1 ASX dividend recommendation - currently paying a 6.7% gross yield!

Even better, this 'under the radar' consumer play is growing like gangbusters. Shares have rocketed 100% in the last 5 years, DOUBLING shareholders' investment. So what's not to like?

Simply click here to grab your free copy of this up-to-the-minute research report right now.

Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

HOT OFF THE PRESSES: My #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.