The Brickworks Limited (ASX: BKW) share price and dividends have been growing over the years.
But there are several reasons why Brickworks could keep climbing to new heights, at a solid rate.
Investors may want to pay attention to
these three growth factors for Brickworks:
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US expansion
Brickworks has grown into a very large building products provider, with exposure to a large number of offerings including bricks, paving, masonry, roofing, precast and cement.
However, Australia has a relatively small population compared to the US. The United States is where Brickworks is expanding with acquisitions and organic improvements.
Not only had the ASX share bought brick manufacturers – making it the market leader in the north east of the US – but it has also bought a brick manufacturer which has expanded its scale and earnings further.
The company is working on improving margins and efficiencies. There is a huge addressable market for Brickworks to focus on, as well as expanding into other parts of the North American market.
Property trust growth and pipeline
Brickworks is confident about one particular part of its business that is growing: its joint venture property trust with Goodman Group (ASX: GMG).
The property trust is an important and growing part of the Brickworks share price asset backing.
This is where Brickworks sells excess land into the trust. Goodman gets the land ready for construction. Then, high-quality industrial properties are built on that land.
Due to the huge demand for distribution and logistics facilities, the capital value and rental income of these properties is powering higher.
Two of the biggest and most advanced distribution centres in Australia are being built in Sydney by the property trust, for Amazon and Coles Group Ltd (ASX: COL). When these are completed, as well as others already planned, it is expected to lead to a substantial rise in the rental profit, capital value and distributions to Brickworks.
Investment conglomerate
Brickworks has been a shareholder of the investment business Washington H. Soul Pattinson and Co Ltd (ASX: SOL) for decades.
It's a significant part of the asset backing for the Brickworks share price.
Demand for construction products can be cyclical and uncertain.
However, the Soul Pattinson investment has anchored Brickworks with defensive earnings and a reliable dividend.
Soul Pattinson has a diversified portfolio across a number of different sectors including telecommunications, resources, property, agriculture, financial services, swimming schools and so on.
Two of the biggest holdings are TPG Telecom Ltd (ASX: TPG) and Brickworks itself. Other investments include: New Hope Corporation Limited (ASX: NHC), Tuas Ltd (ASX: TUA), Apex Healthcare, Pengana Capital Ltd (ASX: PCG), Siteminder Ltd (ASX: SDR) and Bailador Technology Investments Ltd (ASX: BTI).
Some of the private investments it has are Round Oak Metals, Ampcontrol, Ironbark and Aquatic Achievers.
Soul Pattinson has grown its dividend every year since 2000.
