Grainger

Website: Grainger
Index: FTSE 250
EPIC: GRI
Supersector: Real Estate
Sector: Real Estate Investment and Services
Subsector: Real Estate Holding and Development
Market Cap: £1.41B
Payout Frequency: Semi-Annual

Grainger Dividend Analysis and Summary

Dividend summary (Grainger plc)

Final dividend: 5.46p per share (gross), subject to AGM approval
Ex-dividend date: 15/01/2026
Record date: 16/01/2026
Payment date: 20/02/2026
DRIP: offered; election deadline 30/01/2026
FY25 interim dividend: 2.85p (paid 07/07/2025)
Total FY25 dividend: 8.31p, up +10% YoY (20th consecutive increase)
Cash cost: final c.£40.4m; interim c.£21.1m; total dividends paid in FY25 c.£58.1m

Coverage and financial support

EPRA EPS: 7.3p (+12%); FY25 dividend of 8.31p implies c.114% payout on EPRA basis (tight cover)
Adjusted EPS (diluted): 9.3p; payout c.89% on adjusted basis
Guidance: EPRA earnings targeted at £60m (8.1p) in FY26 and £72m (9.7p) by FY29. At the current DPS (8.31p), FY26 EPRA cover would be marginal unless DPS growth moderates or earnings step up quickly.
Operating support: Net rental income +12% to £123.6m; occupancy 98.1%; like-for-like rental growth 3.6% (BTR 3.4%).
Balance sheet and funding: LTV 38.4% (target c.30% by FY29 via £300–350m deleveraging); average cost of debt 3.3%, 100% hedged to FY29; remaining committed capex c.£130m.

Dividend sustainability and trajectory (analyst view)

Grainger maintains a strong record of progressive dividends (+10% in FY25). Underlying rental growth, very high occupancy, and a largely fixed/hedged debt stack through FY29 underpin near-term cash generation.
However, on the sector-preferred EPRA basis, FY25 dividends were not covered (114% payout). Management’s FY26 EPRA EPS target (8.1p) suggests limited headroom for another double-digit DPS increase without improved earnings momentum, mix benefits or policy moderation.
Conversion to REIT should enhance tax efficiency and recurring cashflows over time, supporting dividends. The strategy to recycle capital and deleverage toward c.30% LTV improves medium-term resilience and dividend capacity.
Overall: near-term dividend appears adequately supported by cash generation and hedged funding; future growth likely to track earnings delivery from the committed pipeline and deleveraging progress rather than continue at double-digit rates every year.

Structural changes and policy signals

REIT conversion (Sept 2025): expected to enhance shareholder returns and support ongoing dividend growth; REIT distribution rules apply.
Capital allocation: priority on delivering the £343m committed pipeline (c.£130m spend remaining), deleveraging £300–350m to FY29, and ongoing recycling of lower-yielding assets into BTR.
Regulatory outlook: Renters’ Rights Act provides clarity; rejection of rent control aligns with the model—constructive for medium-term rental growth and dividend support.

Risks and flags for dividend stability

Tight EPRA cover: FY25 DPS exceeded EPRA EPS; FY26 guidance implies minimal cover unless earnings step up or DPS growth moderates.
Leverage: LTV at 38.4% (above c.30% target); deleveraging depends on continued asset sales and operating cashflows.
Interest rate roll-off risk post-FY29: current low cost of debt is hedged to FY29; higher refinancing costs later could compress cover if not offset by earnings growth.
Rental growth normalising: LfL growth moderated to 3.6% (guidance 3–3.5% for FY26), limiting organic uplift.
Fire safety remediation provisions persist (legacy sites), though not currently material to cash flows.
Execution risk on pipeline delivery and disposals; valuation and macro headwinds could affect proceeds and leverage trajectory.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
16/01/2025	21/02/2025	Final	5.01p	GBX
22/05/2025	07/07/2025	Interim	2.85p	GBX

Total (Annual Dividends Per Share): 7.86p

Dividend Yield = Annual Dividends Per Share (7.86p) ÷ Share Price (194p) = 4.05%

Ex Dividend Date	Payment Date	Type	Amount	Currency
15/01/2026	20/02/2026	Final	5.4600p	GBX
22/05/2025	07/07/2025	Interim	2.85p	GBX
16/01/2025	21/02/2025	Final	5.01p	GBX
23/05/2024	05/07/2024	Interim	2.54p	GBX
28/12/2023	14/02/2024	Final	4.37p	GBX
25/05/2023	03/07/2023	Interim	2.28p	GBX
29/12/2022	14/02/2023	Final	3.89p	GBX
26/05/2022	01/07/2022	Interim	2.08p	GBX
30/12/2021	14/02/2022	Final	3.32p	GBX
27/05/2021	02/07/2021	Interim	1.83p	GBX
24/12/2020	15/02/2021	Final	3.64p	GBX
28/05/2020	03/07/2020	Interim	1.83p	GBX
24/12/2019	10/02/2020	Final	3.46p	GBX
30/05/2019	05/07/2019	Interim	1.73p	GBX
13/12/2018	11/02/2019	Final	3.52p	GBX
24/05/2018	05/07/2018	Interim	1.74p	GBX
28/12/2017	09/02/2018	Final	3.26p	GBX
01/06/2017	30/06/2017	Interim	1.60p	GBX
29/12/2016	10/02/2017	Final	3.05p	GBX
02/06/2016	01/07/2016	Interim	1.45p	GBX
24/12/2015	12/02/2016	Final	2.11p	GBX
04/06/2015	03/07/2015	Interim	0.64p	GBX
29/12/2014	06/02/2015	Final	1.89p	GBX
04/06/2014	04/07/2014	Interim	0.61p	GBX
18/12/2013	07/02/2014	Final	1.46p	GBX
05/06/2013	05/07/2013	Interim	0.58p	GBX

Year	Interim	Final	Currency	Total	Change
2024	2.540	5.010	GBX	7.550	13.530
2023	2.280	4.370	GBX	6.650	11.390
2022	2.080	3.890	GBX	5.970	15.920
2021	1.830	3.320	GBX	5.150	-5.850
2020	1.830	3.640	GBX	5.470	5.390
2019	1.730	3.460	GBX	5.190	-1.330
2018	1.740	3.520	GBX	5.260	8.230
2017	1.600	3.260	GBX	4.860	8.000
2016	1.450	3.050	GBX	4.500	63.630
2015	0.640	2.110	GBX	2.750	10.000
2014	0.610	1.890	GBX	2.500	22.540
2013	0.580	1.460	GBX	2.040

Number of Shares:

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