Softcat

Softcat Dividend Analysis and Summary

• Final ordinary dividend: 20.4p per share (up 12.7% YoY). Ex-dividend: 06/11/2025; Record date: 07/11/2025; Payment date: 16/12/2025. DRIP election deadline: 25/11/2025.
• Special dividend: 16.1p per share (down from 20.9p last year). Same key dates as above.
• Total ordinary dividend for FY2025: 29.3p (up 10.2%). Total cash return incl. special: 45.4p.
• Earnings and cover: Underlying EPS 69.5p (+16.4%); ordinary DPS cover ~2.4x; cover incl. special ~1.5x. Statutory EPS 66.6p.
• Cash and balance sheet: Net cash £182.3m, debt-free; underlying cash conversion 95.6%.
• Policy: Board reiterates progressive ordinary dividend; excess cash returned via specials (unchanged).

• Supportive fundamentals: Double-digit growth in gross profit (+18.3%) and underlying operating profit (+16.9%), strong cash conversion (95.6%) and a net cash position underpin the 10.2% ordinary DPS increase.
• Coverage and affordability: Ordinary dividend covered ~2.4x by underlying EPS, indicating headroom for continued progression. Even including the special, coverage (~1.5x) remains acceptable given the debt-free balance sheet and consistent cash generation.
• Capital allocation discipline: Priority remains organic investment, then progressive ordinary dividend, then returning excess (specials/bolt-on M&A). The cash floor raised to £90m from £75m from FY2026 modestly tightens free cash available for specials but does not impair ordinary dividend progression.
• Outlook consistency: FY2026 guidance implies high single-digit underlying operating profit growth (reported basis low single-digit given FY2025 large deal comps), first-half weighted. This suggests ordinary dividend progression can continue, though specials may flex with deal timing and working capital.