Is Berendsen PLC A Better Dividend Stock Than AstraZeneca plc, BP plc, National Grid plc And BAE Systems plc After Results?

Could Berendsen PLC (LON:BRSN) (LSE:BRSN.L) become a stronger dividend share than AstraZeneca plc (LON:AZN) (LSE:AZN.L), BP plc (LON:BP) (LSE:BP.L), National Grid plc (LON:NG) (LSE:NG.L) and BAE Systems plc (LON:BA) (LSE:BA.L)?

Berendsen PLC
Berendsen PLC

Berendsen PLC (LON:BRSN) (LSE:BRSN.L) has fallen 16.8% so far today after it released its 2016 results to the stock market. Dividends per share increased 5% to 33p, which puts the company’s shares on a dividend yield of 4.3%.

Berendsen’s revenue increased 2% on an underlying basis, with reported revenue 9% higher at £1.1 billion. Adjusted operating profit was £161 million, which is in line with the trading update released in October 2016. Reported operating profit grew 7% to £140.7 million.

The company’s H2 performance was impacted by legacy issues in UK textiles. That division’s profits were £10 million lower compared to the previous year. However, progress across the rest of the company has been maintained and it is taking steps to resolve the issues which surfaced in the UK in 2016.

Berendsen expects profitability to be more H2 weighted in 2017 than in previous years. In H1 2017, it anticipates its performance will be impacted by legacy operations in the UK, but benefits will start to flow in H2. It also expects to make further progress across the rest of the company in 2017, with adjusted operating profit for the year due to be £150 million.

With a dividend yield of 4.3%, Berendsen’s shares hold their own against other popular dividend shares such as AstraZeneca plc (LON:AZN) (LSE:AZN.L), BP plc (LON:BP) (LSE:BP.L), National Grid plc (LON:NG) (LSE:NG.L) and BAE Systems plc (LON:BA) (LSE:BA.L). For example, AstraZeneca has a dividend yield of 4.8%, BAE’s shares have a dividend yield of 3.3%, BP’s dividend yield is 7% and National Grid’s shares have a dividend yield of 4.4%.

In my opinion, the uncertainty which Berendsen faces makes it slightly less appealing as a dividend share than the likes of BAE, AstraZeneca, National Grid and BP. While none of those companies offer guaranteed returns, I think Berendsen’s outlook is less clear due to its legacy issues. I think 2017 could be a mixed year for the company, with H2 likely to be better than H1. Therefore, I think I’ll put Berendsen’s shares on my watch list for now and perhaps revisit it in 6 months, as I think there may be better dividend shares on offer elsewhere at the moment.

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