This ASX company has increased or maintained dividends for 44 years

Brickworks Limited (ASX: BKW) has maintained or increased its dividend yields for the past 44 years. We take a closer look.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Brickworks Ltd (ASX: BKW) is in the brick pit business and the brick pit business is booming.

The building materials producer buys large swathes of land on the urban fringes of Australia's major cities and uses the ground clay to form bricks, which it then sells to the construction industry. It also produces masonry, roofing, and entire facade systems, but a major payoff arrives when urban sprawl crawls far beyond the land it occupies.

At that point, it's often sitting on a real estate gold mine. This profitability has led Brickworks to increase or maintain its dividend yield for the last 44 years. This consistency has prevailed throughout the 1990's recession, 2008's global financial crisis, and the COVID-19 pandemic. Its current grossed-up dividend is 4.5%. 

Brickworks, Soul Patts and Goodman Group

Brickworks started in 1930 and has been a major benefactor of Australia's surging real estate and construction industries, which has allowed it to diversify its assets to continue funding those dividends.

It owns 39.4% of investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which holds significant stakes in telecommunications, energy, mining, and pharmaceutical companies. Soul Patts has increased its dividend every year since 2000, which is the longest increasing dividend streak on the ASX. 

Brickworks also owns 50% of a joint venture trust with Goodman Group (ASX: GMG) that it uses to fully service those leftover brick pits before renting or selling the land. Brickworks sells its used operational land to the trust at market value, Goodman then builds the infrastructure required, and both companies benefit from increased profitability at every step of the process. 

There's no shortage of demand for this development expertise. The Brickworks/Goodman joint venture is currently building Amazon's $500 million robotics warehouse near the future Western Sydney Airport in Badgerys Creek. This is reflected in a more than 60% revenue increase over the past year for the venture.

Brickworks forecast and ASX performance

The interesting counterpoint to Brickworks' ASX dividend track record is its current and forecasted earnings, with earnings before interest, tax and depreciation down 19% in FY20. 

From January to May 2020 the brickmaker's Australian earnings dropped 10% and US earnings slumped 30% as it cut 200 jobs at the height of the pandemic.  The recovery has been swift but unexciting, with forecast annual revenue growth of 3.5% slower than the Australian market's 6% weighted average. 

The Brickworks share price has a year-to-date return of -2.20% and while its 5-year share price return is up by 23%, that's still less than the market return. Its lower than average price-to-earnings ratio of 9.11 also shows a degree of pessimism from the general market. The company's performance in the US — where it has a heavy focus on the northeastern states — has also failed to meet recent expectations due to the COVID pandemic.

At Brickworks' 2020 AGM, however, what Brickworks chair Robert Millner is selling to investors was clear: 

In the current environment of global uncertainty and record low interest rates, we recognise that a reliable source of income is more important than ever to our shareholders. Our ability to once again increase dividends is testament to our strong financial position, prudent capital management and our diversified business model.  

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Dividend Shares

falling healthcare asx share price Mesoblast capital raising
⏸️ Dividend Shares

Sonic Healthcare (ASX:SHL) dividend rises 7%, share price falls after FY21 results

Triple digit profit growth and a solid dividend was not enough to impress investors on Monday.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
⏸️ Dividend Shares

The Adairs (ASX:ADH) dividend more than doubled in FY21

A record financial result will see a generous dividend paid out to Adairs shareholders.

Read more »

A businessman on a road raises his arms as dollar notes rain down on him.
⏸️ Dividend Shares

The Newcrest (ASX:NCM) dividend boosted 129%

Newcrest marks its sixth successive year of increasing dividend payments to shareholders

Read more »

Happy couple laughing while shopping in supermarket
52-Week Highs

August has been a great month so far for the Woolworths (ASX:WOW) share price

We take a look at how shares in the supermarket giant have been performing ahead of the company's full-year results

Read more »

wine glass full of coins
⏸️ Dividend Shares

The Treasury Wines (ASX:TWE) dividend bumped up by 60%

Here's how Treasury Wines dividends for FY21 have stacked up.

Read more »

Young boy cries and covers eyes with torn money on table
⏸️ Dividend Shares

The Origin (ASX:ORG) dividend has dropped 20%

What's happened to Origin's dividends?

Read more »

two people hold a sheet above their head while making a bed in a room featuring homewares.
Retail Shares

How did the Adairs (ASX:ADH) share price respond last earnings season?

The homewares retailer will be looking for another year like last year when it releases its FY21 earnings tomorrow.

Read more »

Two men excited to win online bet
Share Market News

Why the Tabcorp (ASX:TAH) dividend was boosted by 32%

The strong performance of Tabcorp's business will see a combined FY21 dividend of 14.5 cents.

Read more »