Serco Group
Website:
Serco Group
Index:
FTSE 250
EPIC: SRP
Supersector:
Industrial Goods and Services
Sector:
Support Services
Subsector:
Business Support Services
Market Cap:
£2.8B
Payout Frequency: Semi-Annual
Serco Group Dividend Analysis and Summary
Key dividend details
- Final dividend (FY25): 3.05p per share
- Total FY25 dividend: 4.50p per share (up 8% YoY; FY24: 4.16p)
- Ex-dividend date: 09/04/2026
- Record date: 10/04/2026
- Payment date: 08/05/2026
- Dividend policy/context: Board reiterates commitment to a growing and sustainable ordinary dividend within a disciplined capital allocation framework.
Dividend coverage and affordability
- EPS cover (FY25): Underlying diluted EPS 16.93p vs DPS 4.50p ? c.3.8x cover (payout c.27%). On reported diluted EPS 14.07p, cover c.3.1x.
- Cash flow cover (FY25): Free cash flow £219m vs dividends paid £43.3m ? c.5x cover.
- Balance sheet: Adjusted net debt £206m; leverage 0.7x (below 1–2x target), providing headroom.
- Forward look (FY26 guidance): Underlying operating profit c.£300m; FCF c.£160m (still >3x cover on an annual DPS cost of ~£45m). Trading cash conversion expected at least 80%.
Analysis: sustainability and growth trajectory
- Quality of cover: Strong earnings and cash cover, a multi-year record of robust cash conversion (FY25: 112%), and low leverage support dividend sustainability.
- Growth prospects: FY25 DPS up 8%; management targets ongoing growth. FY26 guidance implies higher profit and continued cash generation; a substantial order book (£14.5bn, +9%) and record pipeline (£12.1bn) underpin medium-term earnings visibility.
- Capital allocation: Explicit commitment to grow ordinary dividends while returning surplus capital via buybacks. With leverage below target, DPS growth remains well-supported alongside buybacks.
- Coverage resilience: Even with FY26 FCF guide lower at £160m (mobilisation effects), dividend remains comfortably covered; buybacks will also modestly reduce the cash cost of future dividends.
Structural and capital allocation developments impacting dividends
- New £75m share buyback announced, to complete by HY26; follows £50m buyback in 2025. Cumulative buybacks since 2021 now substantial—supportive to per-share metrics and future DPS affordability.
- MT&S acquisition (£242m EV) completed May 2025, broadening defence/space capabilities; expected to contribute to FY26 profit growth (supports dividend capacity).
- Portfolio focus: Disposal of Hong Kong operations; strategic partnership with Mubadala (certain ME contracts novated—reduces reported revenue but no impact to underlying profit), both consistent with disciplined capital deployment.
- Board to review capital position at HY26, keeping optionality for further buybacks or bolt-ons alongside dividend growth.
Risks and flags to dividend stability
- Revenue mix shifts: Lower immigration activities in UK & Europe and Asia Pacific weigh on divisional growth; FY26 assumes c.3% organic growth driven by Defence and Citizen Services to offset.
- Cash flow guidance: FY26 FCF guided to £160m (down from £219m) due to working capital/mobilisation; still ample cover but a watch-point.
- Financing costs rising: Higher USPP debt costs (blended c.5.64%) lift net finance costs to c.£52m in FY26; currently manageable given profit growth and low leverage.
- Government exposure: Timing risks from procurement cycles (e.g., US shutdown delays), rebid calendar (~£0.5bn ACV in 2026), and policy changes remain inherent sector risks.
- Asia Pacific: Turnaround ongoing; partial derecognition of Australian deferred tax asset signals cautious outlook—even if non-cash, it highlights execution risk in that region.
- FX sensitivity and geopolitical developments (especially Middle East) may affect timing and margins, though diversified footprint and strong order book mitigate.
Read more
Serco Group Annual Dividend Yield - 1.53%
Dividends Used in Calculation:
| Ex-Dividend Date |
Payment Date |
Type |
Amount |
Currency |
| 10/04/2025 |
09/05/2025 |
Final |
2.82p |
GBX |
| 28/08/2025 |
03/10/2025 |
Interim |
1.45p |
GBX |
Total (Annual Dividends Per Share):
4.27p
Dividend Yield =
Annual Dividends Per Share (4.27p)
÷ Share Price (278.8p)
= 1.53%
Serco Group Dividend History
| Ex Dividend Date |
Payment Date |
Type |
Amount |
Currency |
| 09/04/2026 |
08/05/2026 |
Final |
3.0500p |
GBX |
| 28/08/2025 |
03/10/2025 |
Interim |
1.45p |
GBX |
| 10/04/2025 |
09/05/2025 |
Final |
2.82p |
GBX |
| 29/08/2024 |
04/10/2024 |
Interim |
1.34p |
GBX |
| 18/04/2024 |
10/05/2024 |
Final |
2.27p |
GBX |
| 07/09/2023 |
06/10/2023 |
Interim |
1.14p |
GBX |
| 11/05/2023 |
09/06/2023 |
Final |
1.92p |
GBX |
| 08/09/2022 |
06/10/2022 |
Interim |
0.94p |
GBX |
| 12/05/2022 |
07/06/2022 |
Final |
1.61p |
GBX |
| 16/09/2021 |
12/10/2021 |
1st Interim |
0.80p |
GBX |
| 13/05/2021 |
04/06/2021 |
Final |
1.40p |
GBX |
| 14/05/2020 |
05/06/2020 |
Final |
1.00p |
GBX |
| 03/09/2014 |
17/10/2014 |
Interim |
3.10p |
GBX |
| 12/03/2014 |
14/05/2014 |
Final |
7.45p |
GBX |
| 04/09/2013 |
18/10/2013 |
Interim |
3.10p |
GBX |
| Year |
Interim |
Final |
Currency |
Total |
Change |
| 2024 |
1.340 |
2.270 |
GBX |
3.610 |
17.970 |
| 2023 |
1.140 |
1.920 |
GBX |
3.060 |
20.000 |
| 2022 |
0.940 |
1.610 |
GBX |
2.550 |
15.900 |
| 2021 |
|
1.400 |
GBX |
2.200 |
120.000 |
| 2020 |
|
1.000 |
GBX |
1.000 |
-67.740 |
| 2014 |
3.100 |
|
GBX |
3.100 |
-70.610 |
| 2013 |
3.100 |
7.450 |
GBX |
10.550 |
|
Serco Group Dividend Calculator
Serco Group Dividend Growth
| Dividend Growth (1Y) |
8.17%
|
| Dividend CAGR (5Y) |
26.3%
|
| Years of Growth |
4
|
| Payout Ratio |
29.74%
|
| Buyback Yield |
4.03%
|
| Shareholder Yield |
5.65%
|
| P/E Ratio (TTM) | 19.63 |
|---|
| Forward P/E | 14.79 |
|---|
| P/FCF | 6.43 |
|---|
| Earnings Yield | 5.32% |
|---|
| FCF Yield | 15.54% |
|---|
| ROE | 16.97% |
|---|
| ROCE | 11.6% |
|---|
| Profit Margin | 2.99% |
|---|
| Operating Margin | 4.39% |
|---|
| Gross Margin | 10.52% |
|---|