Breville results on the boil

Breville (ASX: BRG), the household appliance maker that sells products under the Breville, Kambrook, Phillips and Sage brand names, has reported a 13.7% increase in revenues and an 8.2% increase in net profit after tax. The results have sent the share price up 10% by midday to an all-time high of $8.18.

The result was also buoyed by an 8.3% increase in the full year dividend to 26 cents from last year’s 24 cents per share.

Looking forward the outlook for Breville is positive. The company continues to earn high returns on invested capital, the balance sheet is in a net cash position, it recently signed famous chef Heston Blumenthal as its global ambassador and it has also reached a partnership agreement with Nespresso to sell Breville co-branded Nespresso machines in Australian and New Zealand.

The one dark cloud hanging over the company is its ability to replace the impact from its lost commission income associated with the Keurig distribution agreement. In FY2013 the Keurig business contributed $17.1 million; management has moved quickly to create new earnings streams in FY2014 and minimise the Keurig loss.

Breville’s results are pleasing too for Premier Investments’ (ASX: PMV) shareholders given that Premier owns 30% of Breville. However shareholders at GUD Holdings (ASX: GUD) will likely view the results with some regret after a failed acquisition attempt in 2009.

As Breville’s results show, strong earnings growth can mean strong dividend growth. Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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