Bunzl (LON:BNZL) Is Paying Out A Larger Dividend Than Last Year

Bunzl plc, the specialist international distribution and services group, has once again demonstrated its commitment to shareholder value by announcing a larger dividend payout for the year 2024. With a total dividend per share of 73.9p, representing an 8.2% increase compared to the previous year, Bunzl continues its impressive track record of consecutive annual dividend growth, now standing at 32 years. This news is particularly encouraging for income-seeking investors who value stability and growth in their dividend income.

A Strong Financial Foundation

Bunzl's ability to increase its dividend payout is underpinned by a robust financial performance in 2024. The company reported revenue of £11,776.4 million, a 3.1% increase at constant exchange rates. This growth was driven by slight volume growth and a small easing of deflation, indicating that Bunzl is effectively navigating the challenges posed by a deflationary environment.

The company's adjusted operating profit for 2024 was £976.1 million, a 7.2% increase at constant exchange rates. This strong profitability, coupled with a cash conversion rate of 93%, highlights Bunzl's highly cash-generative business model. The company's adjusted earnings per share (EPS) for 2024 was 194.3p, a 5.5% increase at constant exchange rates, providing a solid foundation for dividend growth.

Strategic Acquisitions and Capital Allocation

One of the key drivers of Bunzl's financial performance is its strategic focus on value-accretive acquisitions. In 2024, the company announced 13 acquisitions with a record annual committed spend of £883 million. These acquisitions not only expand Bunzl's market presence but also contribute to its revenue and earnings growth, which in turn supports its dividend payments.

Bunzl has also announced a commitment to allocate approximately £700 million per annum towards value-accretive acquisitions and, if required, returns of capital to shareholders, in each of the three years ending 31 December 2027. This clear capital allocation plan provides a roadmap for how Bunzl intends to use its financial resources to create long-term value for shareholders.

Dividend Reinvestment Plan (DRP)

For shareholders looking to maximize their investment in Bunzl, the company offers a Dividend Reinvestment Plan (DRP). This plan allows shareholders to use their cash dividend to purchase Bunzl plc shares through a special dealing arrangement. The DRP provides a convenient and potentially beneficial way for shareholders to increase their ownership stake in Bunzl without additional cash outlay.

Potential Benefits and Drawbacks of the DRP

Participating in the DRP can offer several benefits to shareholders, including increased ownership stake, dollar-cost averaging, and convenience. However, it is important to consider the potential drawbacks, such as market timing and lack of flexibility. Investors should carefully evaluate these factors before deciding to participate in the DRP.

Conclusion

Bunzl plc's decision to increase its dividend payout for 2024 is a testament to its strong financial performance and commitment to shareholder value. With a robust financial foundation, strategic acquisitions, and a clear capital allocation plan, Bunzl is well-positioned to continue its track record of dividend growth. For income-seeking investors, Bunzl offers a compelling opportunity to benefit from stable and growing dividend income.



As always, it is important for investors to conduct their own due diligence and consider their individual investment goals and risk tolerance before making any investment decisions. Bunzl's strong financial performance and commitment to shareholder value make it a compelling option for investors seeking stable and growing dividend income.