With the likes of Diageo, Tesco, and Unilever, the UK has some nice dividend shares. However I believe there may additionally be some excellent alternatives exterior the FTSE 100.

Renew Holdings (LSE:RNWH) is a set of companies that keep the UK’s water, electrical energy, and rail infrastructure. And I believe there’s an terrible lot to love concerning the inventory.

Infrastructure 

Renew’s operations contain sustaining, changing, and upgrading, issues like rail tracks, transmission strains, and water pipes. And there are a number of points of interest to being on this business.

The UK’s infrastructure is crucial to it functioning. Because of this, there’s vital funding dedicated to the markets the agency operates in and that is protected by regulation. 

On high of this, the initiatives it engages in require a number of specialist data and technical experience. This creates a big barrier to entry for potential opponents.

Regardless of this, Renew does have opponents, together with Balfour Beatty, Kier Group, and Costain. All of those are considerably bigger than Renew, giving them benefits that include scale.

Renew nonetheless, differentiates itself by specializing in upkeep as an alternative of recent builds. Because of this, it has deep experience within the distinctive necessities related to ongoing repairs.

The agency has a decentralised construction, with subsidiaries specialising in several areas, from repairing bridges to fixing pipes. And specializing in particular niches has generated nice outcomes.

Development and dividends

Renew shares presently include a dividend yield of round 2.75%. However the firm solely distributes round a 3rd of the free money it generates. The remainder is reinvested into the enterprise to fund development. And a very good quantity of this has concerned buying smaller corporations during the last 10 years. 

This may be dangerous, nevertheless it has generated spectacular outcomes for Renew. Revenues have nearly doubled within the final decade and earnings per share have gone from 9p to 53p.

Importantly, the corporate’s managed to take care of sturdy returns on fairness over this era. That’s a very good signal the agency’s doing a very good job of producing development with the money it retains.

The inventory’s down 25% because the begin of the 12 months and the massive purpose is the January buying and selling replace. Renew (with out irony) reported that rail enchancment works have been topic to delays.

The agency reiterated although, that its prospects stay dedicated to document ranges of funding in rail infrastructure. That makes the drop within the inventory seem like a chance to me.

A inventory to think about shopping for

Till just lately, Renew Holdings wasn’t on my radar in any respect. However whereas it doesn’t function in a very high-octane business, I believe it seems to be very engaging as a enterprise.

Sustaining the UK’s infrastructure is non-optional and spending is dedicated by regulation and this could give the corporate loads of alternatives for future development. Renew has grown impressively during the last 10 years and I don’t see an enormous change on the horizon.

So I’m on the brink of take a better have a look at this inventory.