Brickability Group‘s (LSE:BRCK) a distributor of construction materials (not just bricks) and has built (excuse the pun) a reputation as a dividend stock. And with earnings growing strongly I’m positive shareholders will likely be hopeful that its payout will proceed to rise.

On 24 April, the group launched a pre-close buying and selling replace stating that income for the 12 months ended 31 March (FY25) is predicted to be 7% greater than in FY24. Additionally, adjusted EBITDA (earnings earlier than curiosity, tax, depreciation and amortisation) is forecast to be 11% higher.

Among the enchancment is because of its specialist cladding and fireplace remediation division delivering tasks forward of schedule. It is a shift of turnover between accounting intervals reasonably than new enterprise. However the group stated there was “good momentum in trading” extra usually.

Inside per week of this announcement, the group’s share price had risen 15.5%. However its shares are actually altering fingers for under fractionally greater than earlier than the information was launched. It means almost the entire profit to shareholders from its FY25 outcomes being forward of expectations has been misplaced.  

So what’s happening?

Downsizing

A fast take a look at the corporate’s different inventory trade bulletins is revealing. On 13 June, Alan Simpson, a non-executive director (NED), and Sarah Simpson, a detailed affiliate, lowered their mixed stake from 11% to 7.23%. The shares fell almost 6% when this information was introduced. The quantity acquired hasn’t but been disclosed however it’s more likely to be across the £7m mark.

And two days earlier, the managing director of Brickability’s Distribution division bought 3m shares and one other NED offloaded 1m. These gross sales realised proceeds of £2.07m and £690,000 respectively.

After all, I’ve no thought why these people have determined to scale back their stakes within the firm. Everybody has totally different monetary circumstances and I don’t assume it’s unreasonable to ‘cash out’ at some stage. In spite of everything, you possibly can’t spend shares. However regardless of the causes, these gross sales aren’t a superb look.

Lack of earnings

These senior managers are going to overlook out on beneficiant ranges of passive earnings. Primarily based on quantities paid over the previous 12 months, the inventory’s at present (20 June) yielding 5.5%. The FTSE AIM All-Share index is providing 2.27%.

We don’t but know what the ultimate dividend for FY25 will likely be however it appears as if it’s more likely to be greater than it was in FY24. In that case, it means the group can have elevated its annual payout for 4 consecutive years.

Ultimate ideas

However the group’s comparatively small. As its listed on the Different Funding Market (AIM) with a market-cap of just below £200m, it doesn’t have the monetary firepower to deal with a sustained downturn within the UK development trade.

And though I’m positive there are completely legitimate causes for the administrators’ share gross sales, they’re more likely to dent investor confidence.

However the group has heaps going for it. Income and earnings are on track and the inexperienced shoots of a restoration are beginning to present within the housebuilding sector. Additionally, the UK cladding ‘scandal’ is offering loads of alternatives for additional work.

For these causes, when mixed with a wholesome 5%+ yield, buyers might take into account including the inventory to their portfolios.