Cashbuild (JSE:CSB): Assessing Dividend Sustainability Amid Historical Declines and Optimistic Earnings Projections

Cashbuild (JSE:CSB), a South African home improvement retailer, has long been a fixture in income-focused portfolios due to its historical dividend payouts. However, its recent financial performance and forward-looking projections present a nuanced picture for investors evaluating its reliability as an income stock. This analysis examines whether the company’s ZAR3.00 dividend—set to be paid on 29 September 2025—and projected 50.2% earnings per share (EPS) growth signal a sustainable turnaround or remain inconsistent with long-term income reliability amid a decade of declining dividends.

Historical Dividend Declines and Recent Stabilization

Cashbuild’s dividend history reveals a troubling trend: annual payouts have declined from ZAR7.12 in 2015 to ZAR3.00 in 2025, representing an average annual drop of 2.3% [1]. This erosion, driven by economic pressures such as high interest rates and weak consumer spending in South Africa, has raised concerns about the company’s ability to maintain income for shareholders [2]. For instance, the 2023 dividend fell to ZAR4.00 per share, a sharp decline from ZAR5.87 in 2022 [3].

However, the 2025 dividend of ZAR3.00—announced alongside a 3.9% yield—marks a modest stabilization. According to a report by Simplywall Street, this yield aligns with industry averages, suggesting the company is no longer lagging peers in terms of income generation [4]. The payout ratio of 40% further indicates prudence, as it leaves ample room for reinvestment and buffers against economic volatility [1].

Earnings Momentum and Analyst Projections

The recent dividend increase coincides with a significant rebound in Cashbuild’s earnings. For the fiscal year ending June 2025, EPS surged to ZAR10.43 from ZAR3.96 in 2024, a 163% year-over-year improvement [5]. This growth, driven by cost discipline and a 4% revenue increase in Q4 2024, has bolstered confidence in the company’s financial health [6].

Analysts project this momentum will continue. Simplywall Street estimates a 50.2% EPS growth in 2026, with further gains of 14.5% annually through 2027 [7]. These forecasts, if realized, could enable Cashbuild to increase dividends beyond ZAR3.00 while maintaining a sustainable payout ratio. For context, a 50.2% EPS growth would push 2026 earnings to ZAR15.48, providing a strong foundation for dividend hikes.

Risks to Long-Term Income Reliability

Despite these positives, historical and operational risks persist. Cashbuild’s 2024 annual report revealed a 37% decline in cash reserves to ZAR998.9 million, raising questions about liquidity [8]. Additionally, while Q4 2024 showed stabilization, the company’s 2023 performance included a 4% revenue decline and a 20% drop in headline earnings per share (HEPS) for the first half of 2023 [2]. These fluctuations highlight vulnerability to South Africa’s macroeconomic challenges, including inflation and consumer debt.

Moreover, the EPS growth over the past year masks a 10% decline in 12-month EPS, underscoring the need for caution [9]. While the 2025 results are encouraging, investors must assess whether the company can sustain this performance amid ongoing economic headwinds.

Balancing Optimism and Caution

Cashbuild’s recent dividend and earnings trajectory suggests a potential inflection point. The ZAR3.00 payout, supported by a 40% payout ratio and a 3.9% yield, appears sustainable in the near term. Analyst projections of 50.2% EPS growth in 2026 further reinforce the possibility of dividend increases. However, the historical decline in dividends and liquidity constraints necessitate a cautious approach.

For income-focused investors, Cashbuild offers a compelling but not risk-free proposition. The company’s ability to navigate South Africa’s economic environment and maintain its earnings momentum will be critical. Those willing to accept moderate volatility for potential income growth may find value in the stock, but diversification and close monitoring of macroeconomic indicators remain prudent strategies.

Source:
[1] Cashbuild (JSE:CSB) Is Due To Pay A Dividend Of ZAR3.00, [https://sg.finance.yahoo.com/news/cashbuild-jse-csb-due-pay-072902996.html]
[2] Ghost Bites (Cashbuild | Ellies | Kumba | MC Mining | Mpact, [https://www.ghostmail.co.za/ghost-bites-cashbuild-ellies-kumba-mc-mining-mpact-orion-reinet-sasol-shoprite/
[3] Cashbuild (JSE:CSB) Dividend Yield, History and Growth, [https://simplywall.st/stocks/za/retail/jse-csb/cashbuild-shares/dividend]
[4] Cashbuild (JSE:CSB) Will Pay A Dividend Of ZAR3.00, [https://simplywall.st/stocks/za/retail/jse-csb/cashbuild-shares/news/cashbuild-jsecsb-will-pay-a-dividend-of-zar300]
[5] Cashbuild Full Year 2025 Earnings: EPS: R10.43 (vs R3.96 in ..., [https://uk.finance.yahoo.com/news/cashbuild-full-2025-earnings-eps-043626917.html]
[6] Cashbuild Limited – Annual results and dividend declaration for the year ended 29 June 2025, [https://www.moneyweb.co.za/mny_sens/cashbuild-limited-annual-results-and-dividend-declaration-for-the-year-ended-29-june-2025/]
[7] Cashbuild (JSE:CSB) Stock Forecast & Analyst Predictions, [https://simplywall.st/stocks/za/retail/jse-csb/cashbuild-shares/future]
[8] Cashbuild Group AFS 2024: Annual Consolidated Financial Statements, [https://www.studocu.com/en-za/document/universiteit-stellenbosch/financial-accounting/cashbuild-group-afs-2024-annual-consolidated-financial-statements/135386250]
[9] CSBJ | Cashbil Share Price, [https://za.investing.com/equities/cashbil]