The Games Workshop Group PLC announcement that it will pay a dividend of 45p is an “important signpost” for cash generation and profit performance, said broker Peel Hunt.
So far this year, the maker of the Warhammer tabletop game has declared a total of 165p of dividends, compared to 65p in the same period last year.
“Comparison year on year can be confusing given that the timing of dividends does not follow a regular pattern,” analyst Charles Hall said in a note.
As dividends actually paid in the past year were 115p in the first half and 170p in the second, the analyst said the “scale and timing of payments this year should be encouraging given that the company pays dividends out of ‘truly surplus cash’”.
This is why he said dividends are a signpost for the performance of cash and profit.
The most recent update from the company on trading was in September when it announced first quarter sales growth of 8% to £106mln for the three months to 28 August.
“Hobbies tend to be recession-resilient and Games Workshop’s revenues are driven more by the strength of the product launches than the background economy,” Hall said.
He said product launches continue to be well received and there are a number of upcoming games releases “that should generate attractive royalty income”, including with Frontier Developments.
Peel Hunt has now updated its forecasts to increase 2024 earnings per share by 8%, though this is related to the change in UK tax rates.