Is Stagecoach A Better Dividend Stock Than Vodafone, National Grid, Centrica And Royal Mail After Trading Update?

Will Stagecoach Group plc (LON:SGC) (SGC.L) outperform other dividend shares such as Vodafone Group plc (LON:VOD) (VOD.L), National Grid plc (LON:NG) (NG.L), Centrica PLC (LON:CNA) (CNA.L) and Royal Mail PLC (LON:RMG) (RMG.L)?

Stagecoach
Stagecoach

The Stagecoach Group plc (LON:SGC) (SGC.L) share price has gained 1.8% today after the release of a trading update. It is on target to meet full year earnings per share. LFL revenue movements have been mixed, with UK Bus (regional operations) and UK Bus (London) registering negative LFL revenue growth of 1.7% and 0.9% respectively. Stagecoach’s North America operations also recorded negative LFL sales growth of 2.2%.

However, there was better news for Stagecoach’s investors regarding its UK Rail and Virgin Rail segments. They registered positive LFL sales growth of 1.6% and 5.3% respectively. This is in spite of slowing growth in the UK rail industry over the last 18 months, with the company’s LFL growth rates being low by historical standards.

Trading at Stagecoach’s megabus.com inter-city coach business in North America continues to improve following the action taken to match services with changes in demand from customers. The market remains difficult due to sustained lower fuel prices, which have increased car and air competition. In UK Bus, weak underlying local economic conditions in some parts of the UK and lower fuel prices contributed to negative growth rates.

With a dividend yield of over 6%, Stagecoach’s shares have a relatively high income return. It compares favourably to other popular income stocks such as Vodafone Group plc (LON:VOD) (VOD.L), National Grid plc (LON:NG) (NG.L), Centrica PLC (LON:CNA) (CNA.L) and Royal Mail PLC (LON:RMG) (RMG.L). Centrica’s dividend yield is 5.5%, Royal Mail’s yield is 5.3%, Vodafone’s shares have a dividend yield of 5.5% and National Grid’s dividend yield is 4.3%.

In my view, Stagecoach’s shares have dividend appeal for the long run. I think its performance has been mixed, but still in line with expectations. I think National Grid and Vodafone may have more stable dividends due to their more consistent business performance. But I think Stagecoach could be a relatively appealing dividend stock when compared to Centrica, Royal Mail and other popular income shares.

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