Why Ramsdens Holdings (LON:RFX) Is a High-Conviction Buy for Long-Term Income and Growth Investors

For income-focused investors seeking a blend of stability and growth, Ramsdens Holdings (LON:RFX) emerges as a compelling opportunity. The company's robust dividend history, sustainable payout ratios, and aggressive expansion strategy position it as a high-conviction buy for those prioritizing long-term total shareholder returns.

Dividend-Driven Income: A Track Record of Growth and Sustainability

Ramsdens Holdings has demonstrated a consistent ability to reward shareholders through its dividend policy. Over the past five years, the company has significantly increased its payouts, from a final dividend of 1.2p per share in 2021 to a total dividend of 11.2p per share in 2024 and 2025. The 2025 interim dividend of 4.5p per share, announced for the six months ending March 31, 2025, marks a 25% increase from the 3.6p per share paid in 2024. This trajectory underscores a commitment to shareholder returns while maintaining financial prudence.

The sustainability of these payouts is reinforced by Ramsdens' low payout ratios. For 2025, the company reported a payout ratio of 41.63%, well below the 100% threshold that signals over-leveraging. Additionally, the dividend is supported by a cash payout ratio of 35.2%, indicating that cash flows comfortably cover obligations. These metrics suggest that Ramsdens' dividend is not only secure but also poised for further growth as earnings expand.

The dividend yield, though subject to variation, remains attractive. A trailing twelve-month (TTM) yield of 3.04% reflects recent performance, while the 4.88% yield for 2024 highlights the impact of lower stock prices during that period. For long-term investors, the forward-looking yield-calculated using projected dividends-offers a more relevant benchmark, particularly as the company's earnings growth trajectory suggests upward potential in both dividends and share price.

Sustainable Business Expansion: Fueling Future Earnings

Ramsdens' growth strategy is anchored in a dual focus on physical and digital expansion. The company has opened seven new stores in FY24 and plans to add five more in FY25, with locations in Grantham and Burton already contributing to revenue growth. Looking ahead, Ramsdens aims to open 8–12 new stores annually from 2026 to 2027, with a strategic emphasis on underrepresented regions like the South East of England. This expansion is supported by a robust balance sheet, including £7.4 million in net cash and a £15 million revolving credit facility, providing flexibility for acquisitions and capital expenditures.

Digital innovation is equally critical to Ramsdens' growth. The launch of a dedicated pawnbroking website in November 2024 and a gold-buying platform in March 2025 has driven an 11% increase in pawnbroking gross profit in H1 2025. Online sales now account for 20% of jewellery revenue and 12% of foreign currency sales, demonstrating the company's ability to adapt to evolving consumer preferences. These initiatives are expected to scale further, with plans to roll out international money transfer services across all stores.

ESG Commitments: Strengthening Long-Term Resilience

Ramsdens' commitment to environmental, social, and governance (ESG) principles enhances its long-term sustainability. The company has transitioned to 100% renewable electricity and is accelerating the adoption of LED lighting in older stores to reduce energy consumption. Recycling initiatives, including a uniform recycling scheme and jewellery recycling programs, further align with global sustainability trends. Socially, Ramsdens is scaling employee volunteering schemes and improving data collection on energy and water usage, reflecting a holistic approach to ESG integration.

These efforts not only mitigate regulatory and reputational risks but also resonate with a growing base of ESG-conscious investors. As Ramsdens transitions leadership with the appointment of a new Chair in FY25, its ESG roadmap positions it to capitalize on green finance opportunities and stakeholder trust.

Financial Performance: A Catalyst for Shareholder Value

Ramsdens' financial results underscore its growth potential. Profit before tax surged 54% to £6.1 million in H1 2025, with revenues reaching £51.6 million for the same period. The company has raised full-year 2025 profit before tax expectations to at least £13 million, reflecting confidence in its strategic initiatives. Analysts project earnings growth of 6.1% annually and revenue growth of 7.2% annually through 2027, with a return on equity of 15% anticipated in three years. These metrics suggest that Ramsdens is not only generating income for shareholders but also creating substantial capital appreciation potential.

Conclusion: A High-Conviction Buy for Income and Growth

Ramsdens Holdings combines a proven dividend growth trajectory with a sustainable expansion strategy and strong ESG credentials. Its ability to balance shareholder returns with reinvestment in growth-through both physical and digital channels-positions it as a rare combination of income and growth potential. For investors seeking a high-conviction buy, RFX offers a compelling case: a company that rewards today while building a resilient, scalable business for tomorrow.