Costain Group

Website: Costain Group
Index: FTSE 250
EPIC: COST
Supersector: Construction and Materials
Sector: Construction and Materials
Subsector: Heavy Construction
Market Cap: £500.33M
Payout Frequency: Semi-Annual

Costain Group Dividend Analysis and Summary

Key Dividend Details

Final dividend (FY25): 3.2p per share (up 60% YoY), subject to AGM approval
Full-year dividend (FY25): 4.2p per share (up 75% YoY)
Ex-dividend date: 16/04/2026
Record date: 17/04/2026
Payment date: 26/05/2026
Scrip dividend: Available; election deadline 11/05/2026; scrip reference price to be announced 23/04/2026
Dividend policy/cover: Target cover of 3x adjusted earnings; FY25 adjusted EPS 14.5p implies current full-year cover of ~3.5x (payout ratio ~29%)
Capital returns: Planned £20m share buyback in FY26 (after £10m buybacks in each of FY24 and FY25)

Concise Take

The proposed final dividend of 3.2p sets the FY25 total at 4.2p, with an ex-div date of 16/04/2026 and payment on 26/05/2026.
Cover is comfortably above the 3x target, leaving room for progressive dividends if earnings grow as guided.
Scrip option moderates cash outflow; buybacks signal confidence and support per-share growth.

Dividend Sustainability and Growth Outlook

Earnings and cash support: FY25 adjusted operating profit up 9% to £47.1m; adjusted margin 4.5%. Net cash of £189.3m and strong adjusted free cash flow (£63.1m) underpin distributions. Management still expects to be “highly cash generative.”
Guidance and visibility: FY26 guidance for revenue and operating profit growth but margin around ~4.0% (vs 4.5% FY25) as FY25 contract completions don’t repeat. Record forward work of £7.0bn (~7x FY25 revenue) and 90% of FY26 revenue in hand provide visibility; ambition to move margins >5% medium term supports dividend growth potential.
Policy and capacity: Targeting 3x cover on adjusted earnings suggests scope to grow the dividend alongside earnings. At FY25 EPS (14.5p), a 3x cover would equate to c.4.8p per share; current 4.2p leaves headroom.
Capital allocation: Alongside the dividend, a £20m FY26 buyback and ~£10m p.a. investment in systems/digitalisation are planned. Despite these, year-end FY26 net cash is guided to remain strong (~£175m), indicating capacity to sustain the dividend.
Pension de-risking: No further cash contributions to the DB scheme under the new schedule to Jan 2031, and removal of the pension “dividend parity” constraint improves dividend flexibility.

Structural/Policy Changes Relevant to Dividends

Removal of the dividend parity arrangement with the defined benefit pension scheme (announced 26 Jan 2026), lifting a key constraint on shareholder returns.
Share buybacks: £10m completed in FY24 and FY25; £20m planned for FY26, supporting per-share metrics and complementing the ordinary dividend.
Scrip dividend alternative reinstated, lowering cash outlay if taken up.

Risks and Flags to Dividend Stability

Margin guidance lower in FY26 (~4.0%) due to non-recurring FY25 completions and investment; could temper near-term dividend acceleration despite cover headroom.
Working capital: Management guides to a partial unwind of historic WC benefits in FY26; may reduce year-end net cash to ~£175m alongside higher distributions and buybacks.
Project/programme timing risk: HS2 schedule changes and general contract accounting estimation uncertainty (potential downside of £13.4m) could create volatility.
Regulatory/customer risk in Water and wider UK infrastructure (funding cycles, customer financial health) though AMP8/RIIO-3 pipelines are supportive.
Execution discipline remains critical; benefits from pivot to target-cost/long-term programmes reduce but don’t eliminate contract risk.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
17/04/2025	29/05/2025	Final	2.00p	GBX
11/09/2025	17/10/2025	Interim	1.00p	GBX

Total (Annual Dividends Per Share): 3.00p

Dividend Yield = Annual Dividends Per Share (3.00p) ÷ Share Price (186.8p) = 1.61%

Ex Dividend Date	Payment Date	Type	Amount	Currency
16/04/2026	26/05/2026	Final	3.2000p	GBX
11/09/2025	17/10/2025	Interim	1.00p	GBX
17/04/2025	29/05/2025	Final	2.00p	GBX
12/09/2024	18/10/2024	Interim	0.40p	GBX
18/04/2024	28/05/2024	Final	0.80p	GBX
21/09/2023	27/10/2023	Interim	0.40p	GBX
12/09/2019	18/10/2019	Interim	3.80p	GBX
11/04/2019	17/05/2019	Final	10.0p	GBX
13/09/2018	19/10/2018	Interim	5.15p	GBX
12/04/2018	18/05/2018	Final	9.25p	GBX
14/09/2017	20/10/2017	Interim	4.75p	GBX
06/04/2017	19/05/2017	Final	8.40p	GBX
15/09/2016	21/10/2016	Interim	4.30p	GBX
14/04/2016	20/05/2016	Final	7.25p	GBX
17/09/2015	23/10/2015	Interim	3.75p	GBX
16/04/2015	22/05/2015	Final	6.25p	GBX
17/09/2014	24/10/2014	Interim	3.25p	GBX
12/03/2014	25/04/2014	Final	7.75p	GBX
18/09/2013	25/10/2013	Interim	3.75p	GBX

Year	Interim	Final	Currency	Total	Change
2024	0.400	0.800	GBX	1.200	200.000
2023	0.400		GBX	0.400	-97.100
2019	3.800	10.000	GBX	13.800	-4.160
2018	5.150	9.250	GBX	14.400	9.500
2017	4.750	8.400	GBX	13.150	13.850
2016	4.300	7.250	GBX	11.550	15.500
2015	3.750	6.250	GBX	10.000	207.690
2014	3.250		GBX	3.250	-71.730
2013	3.750	7.750	GBX	11.500

Number of Shares:

Payment	Paid	Amount
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