Dignity

A dependable operator in a defensive market, Dignity, the UK’s only listed funeral services provider, continues to deliver for investors.

Floated on the Full List in 2004, expanding Dignity has established a record of strong and reliable trading since. In 2009, the group grew pre-tax profits by a creditable 6% to £36.4m, on turnover up 5% at almost £185m. During the year, a further 7 funeral locations were acquired, the crematoria division grew significantly and Dignity wrought a strong performance from its pre-arranged funeral plans business. Generating a bumper and improved £65.3m (2008: £62.3m) cash last year, Dignity increased its total dividend once again, from 11p to 12.1p.

In its most recent update, covering the first quarter to March, Dignity flagged up a 2% increase in revenue to £53.9m and operating profits maintained at £20.4m. CEO Mike McCollum said this was ‘a good performance by the group’, explaining that trading conditions for the first quarter of 2010 were more consistent with the average of the past five years – last year, Dignity noted an unusually high number of deaths in the first quarter. Reassuringly, McCollum insists trading has remained on track since the end of March and he still expects a positive outcome for the year.

Shares in analysts’ favourite Dignity, first recommended by Growth Company Investor at 742p in 2008, have traded between peaks and troughs of 706.5p and 567p over the past 52-weeks. Offering considerable medium-to-long term improvement potential as Dignity consolidates its chosen market, we consider it is well worth topping up holdings at current share price levels.