Does Bovis Homes Group plc Now Have Less Dividend Appeal Than Vodafone Group plc, SSE PLC, BP plc And Imperial Brands PLC After 3% Fall In Profit?

Is Bovis Homes Group plc’s (LON:BVS) (LSE:BVS.L) dividend outlook inferior to those of Vodafone Group plc (LON:VOD) (LSE:VOD.L), SSE PLC (LON:SSE) (LSE:SSE.L), BP plc (LON:BP) (LSE:BP.L) and Imperial Brands PLC (LON:IMB) (LSE:IMB.L)?

Bovis Homes Group plc
Bovis Homes Group plc

Bovis Homes Group plc (LON:BVS) (LSE:BVS.L) has reported a 13% increase in dividends per share, even though its PBT dropped 3% in FY2016. Reporting to the stock market today, the company said FY2016 was a difficult year for the group, which sent its shares 8.2% lower at the time of writing.

Investors are likely to be disappointed to hear there have been weaknesses in the Bovis production process, while a high number of customer service issues have led to a one-off £7 million customer care provision.

The company will focus in FY2017 on re-setting the business and delivering on its clear operational priorities, which will result in a deliberate slowing its rate of production. It will target completion volumes for 2017 which are 10% – 15% below the 2016 level, before returning to normal industry production levels.

Although the decision to slow production will end with investors seeing a negative impact on earnings and cash flow, Bovis intends to recommend maintaining the dividend at the level declared for 2016. This may signal to the investment world Bovis is confident in its future investment performance.

Bovis has a dividend yield of 5.8%. This is roughly in line with other dividend shares such as Vodafone Group plc (LON:VOD) (LSE:VOD.L), SSE PLC (LON:SSE) (LSE:SSE.L), BP plc (LON:BP) (LSE:BP.L) and Imperial Brands PLC (LON:IMB) (LSE:IMB.L). SSE has a dividend yield of 5.87%, Vodafone’s dividend yield is 5.78%, Imperial Brands has a dividend yield of 4.1% and BP’s dividend yield is 7.22%.

In my view, Bovis offers less dividend appeal than Vodafone, SSE, Imperial Brands or BP. I feel it is at the start of a process of rebuilding and while I do not question its financial strength, I think there are better dividend share available elsewhere. It’s a stock I’ll keep an eye on, but given the degree of choice within housebuilding stocks and elsewhere, I think there are better dividend yields and more consistent stocks in which to invest.

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