The management team at GWA Group Ltd (ASX: GWA) was at pains to reassure investors at the company's recent annual general meeting that returns to shareholders were top of mind for the company.
And considering the current dividend yield of 6.27%, which is based on the company's most recent dividend and the prevailing share price, it's evident that they're currently doing a decent job of just that.
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Analysts encouraged
The team at Macquarie has recently run the ruler over the books at GWA, which makes bathroom and kitchen fittings sold under brands such as Caroma, Dorf, and Clark, and likes what it sees.
One of the things they are predicting is that the company will continue to pay a healthy dividend, forecasting a dividend yield of 6.2% again this year, before rising to 6.8% for the following two years.
Looking at the company's results more broadly, in the most recent financial year, the company delivered a steady result, while not shooting the lights out.
GWA's group revenue increased by 1.2% to $418.5 million, while normalised net profit after tax increased 1.9% to $46.5 million.
Chair Bernadette Inglis told the AGM on Friday that the company remains in a strong financial position, with net debt at June 30 of $85.1 million, "which remains below the company's targeted range''.
She went on to say:
Given this strong financial position and our continued cash flow generation, we commenced an on-market share buyback of up to $30 million from 2 September 2025. Importantly, we expect to maintain a strong balance sheet following completion of the buyback and we will continue to consider capital management initiatives within the context of our growth strategy and capital management framework.
Managing director Urs Meyerhans said in an update on trading to date in this financial year, that it was "in line with our expectations with markets remaining volatile''.
Group revenue for the first quarter was 2.3% higher than the previous corresponding quarter, with all markets faring better, he said.
Attractive valuation
The Macquarie team said the first quarter trading results were broadly in line with expectations, and GWA was "executing well in a complex market, where trends are improving slowly''.
Macquarie has assigned an outperform rating to the stock and a 12-month price target of $3, compared with the closing price of $2.51 on Friday, noting that the valuation at the current price is attractive.
And factoring in the healthy dividend payment, shareholders could expect a total return of 26.1% over the next year.
GWA Group was valued at $655.1 million at the close of trade on Friday.
