Grafton Group

Website: Grafton Group
Index: FTSE 250
EPIC: GFTU
Supersector: Industrial Goods and Services
Sector: Support Services
Subsector: Industrial Suppliers
Market Cap: £1.66B
Payout Frequency: Semi-Annual

Grafton Group Dividend Analysis and Summary

Declared Dividend and Key Dates

Final dividend: 27.00p per share (FY24: 26.50p), up 1.9%.
Ex-dividend date: 23/04/2026.
Record date: 24/04/2026.
Payment date: 21/05/2026 (subject to AGM approval on 15/05/2026).
Interim dividend: 10.75p, paid 10/10/2025.
Full-year dividend: 37.75p (up 2.0% YoY).
Dividend cover: 2.0x on adjusted EPS of 75.43p (at the lower end of the 2–3x target range).

Support from Earnings, Cash Flow and Balance Sheet

Adjusted EPS rose 5.1% to 75.43p; FY DPS rose 2.0% to 37.75p, implying a ~50% payout (2.0x cover).
Strong cash generation: £168.3m free cash flow (88% conversion of adjusted operating profit); cash dividends paid of £72.6m (FCF covers dividends >2x).
Balance sheet strength: £274.0m net cash before leases; lease-adjusted leverage ~0.39x; liquidity £776.8m (cash/deposits plus undrawn RCF).
Capital returns alongside DPS: £129.2m returned in 2025 via dividends and buybacks; new £25m buyback announced (from 05/03/2026). Share count down ~20.5% since May 2022, which supports per-share dividends while containing cash outflow.

Dividend Policy and Growth Trajectory

Board targets dividend cover of 2–3x adjusted earnings and explicitly aims to “re-establish” cover more firmly within this range; hence DPS growth (2.0%) is deliberately below EPS growth (5.1%).
Given healthy FCF, low leverage and ongoing buybacks, the current DPS appears well supported; near-term DPS growth likely to be measured until cover trends above 2.0x.

Structural/Capital Allocation Developments Relevant to Dividends

Buybacks: New £25m programme (from 05/03/2026); £428m returned via buybacks since 2022, reducing share count by ~20.5%—a tailwind for per-share metrics and DPS affordability.
M&A/Portfolio moves: Acquisition of HSS Hire Ireland (May 2025); successful integration of Salvador Escoda (Spain). Disposal of MFP piping (May 2025) with contingent consideration. No share consolidation or dividend policy change announced.
Segment reporting change to geographic units; no impact on dividend policy but improves capital allocation visibility.

Risks and Flags to Dividend Stability

End-market softness: Great Britain and Northern Europe remain challenging; early 2026 like-for-like revenue only +0.2%, with GB -5.7% in Jan–Feb.
Cyclicality: Construction/RMI exposure could pressure earnings if recovery in GB/Northern Europe is delayed.
Integration/execution: Continued integration and expansion in Iberia and HSS Ireland; generally positive but carries operational risk.
FX/interest dynamics: Multicurrency operations introduce translation effects; declining deposit income vs prior year noted, though overall balance sheet strength mitigates.
Governance/approval: Final dividend subject to AGM approval (15/05/2026).

Bottom Line

The 27.00p final dividend (ex-div 23/04/2026) is well covered by earnings and free cash flow, supported by a robust balance sheet and ongoing buybacks.
Management’s emphasis on rebuilding cover within the 2–3x range suggests a cautious but reliable dividend progression in the near term, with medium-term upside as GB/Northern Europe recover.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
17/04/2025	15/05/2025	Final	26.50p	GBX
11/09/2025	10/10/2025	Interim	10.75p	GBX

Total (Annual Dividends Per Share): 37.25p

Dividend Yield = Annual Dividends Per Share (37.25p) ÷ Share Price (887.8p) = 4.2%

Ex Dividend Date	Payment Date	Type	Amount	Currency
23/04/2026	21/05/2026	Final	27.0000p	GBX
11/09/2025	10/10/2025	Interim	10.75p	GBX
17/04/2025	15/05/2025	Final	26.50p	GBX
12/09/2024	11/10/2024	Interim	10.50p	GBX
11/04/2024	09/05/2024	Final	26.00p	GBX
21/09/2023	20/10/2023	Interim	10.00p	GBX
13/04/2023	11/05/2023	Final	23.75p	GBX
08/09/2022	07/10/2022	Interim	9.25p	GBX
07/04/2022	05/05/2022	Final	22.00p	GBX
02/09/2021	01/10/2021	Interim	8.50p	GBX
08/04/2021	05/05/2021	Final	14.50p	GBX
28/01/2021	19/02/2021	Interim	12.50p	GBX
05/03/2020	06/04/2020	Final	12.50p	GBX
26/09/2019	11/10/2019	Interim	6.50p	GBX
07/03/2019	05/04/2019	Final	12.00p	GBX
30/08/2018	28/09/2018	Interim	6.00p	GBX
08/03/2018	06/04/2018	Final	10.25p	GBX
07/09/2017	06/10/2017	Interim	5.25p	GBX
16/03/2017	13/04/2017	Final	9.00p	GBX
08/09/2016	07/10/2016	Interim	4.75p	GBX
17/03/2016	15/04/2016	2nd Interim	8.00p	GBX
10/09/2015	09/10/2015	Interim	4.50p	GBX
19/03/2015	17/04/2015	2nd Interim	7.00p	GBX
03/09/2014	03/10/2014	Interim	3.75p	GBX
12/03/2014	11/04/2014	2nd Interim	5.50p	GBX
04/09/2013	04/10/2013	Interim	3.00p	GBX

Year	Interim	Final	Currency	Total	Change
2024	10.500	26.000	GBX	36.500	8.140
2023	10.000	23.750	GBX	33.750	8.000
2022	9.250	22.000	GBX	31.250	-11.970
2021	21.000	14.500	GBX	35.500	86.840
2019	6.500	12.500	GBX	19.000	5.550
2018	6.000	12.000	GBX	18.000	16.120
2017	5.250	10.250	GBX	15.500	-28.730
2016	4.750	9.000	GBX	21.750	89.130
2015	4.500		GBX	11.500	24.320
2014	3.750		GBX	9.250	208.330
2013	3.000		GBX	3.000

Number of Shares:

Payment	Paid	Amount
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