RS Group

RS Group Dividend Analysis and Summary

• Declared dividend: Final dividend of 14.2p per share.
• Total FY2025/26 dividend: 22.9p per share (up 2% year on year; FY2024/25: 22.4p).
• Ex-dividend date: 11/06/2026.
• Record date: 12/06/2026.
• Payment date: 24/07/2026.
• Dividend cover: 1.7x on adjusted EPS (38.7p).
• Cash outflow for the proposed final dividend: c. £65.8m (subject to AGM approval).
• Capital returns: New £100m share buyback over 12 months alongside progressive dividend policy.

• Coverage and cash backing: Adjusted EPS cover at 1.7x is reasonable for a cyclical distributor. Adjusted free cash flow of £202m versus total dividends paid of £106m implies healthy FCF cover of roughly ~1.9x.
• Balance sheet: Net debt to adjusted EBITDA at 1.0x (bottom of 1.0–2.0x target range) with £335m undrawn facilities supports dividend capacity and concurrent buyback.
• Earnings trajectory: Adjusted EPS down 1% and adjusted operating profit down 3%, but gross margin improved and cash conversion remained strong (109%). The modest 2% DPS growth looks prudent and supported by cash generation rather than earnings growth this year.
• Capital allocation: Management reiterates a progressive dividend policy while funding organic investment (£35–45m expected in 2026/27) and disciplined M&A. The £100m buyback should modestly enhance EPS and dividend cover per share, supporting future DPS progression.
• Outlook support: Mid-term targets (revenue growth >2x market, mid-teen adjusted margins, >80% cash conversion, >20% ROCE) if executed, would strengthen dividend sustainability and potential growth headroom.