Pennon Group

Website: Pennon Group
Index: FTSE 250
EPIC: PNN
Supersector: Utilities
Sector: Gas, Water and Multiutilities
Subsector: Water
Market Cap: £2.69B
Payout Frequency: Semi-Annual

Pennon Group Dividend Analysis and Summary

Key dividend details

Type: Interim dividend (FY 2025/26)
Amount: 9.26p per share (total cash c.£43.7m)
Policy: Dividend to grow in line with CPIH to 2030; Board states the interim is increased by 4.1% in aggregate cash terms. Note: per-share interim is lower than last year’s restated 12.14p due to the enlarged share count following the January 2025 rights issue.
Ex-dividend date: 26/02/2026
Record date: 27/02/2026
Payment date: 03/04/2026
DRIP election deadline: 09/03/2026

Coverage and financial support

H1 adjusted EPS: 14.0p; interim DPS cover ~1.5x.
Underlying EBITDA: £254.4m; management cites interim dividend covered 5.8x by underlying EBITDA.
Liquidity: £1.1bn cash and committed facilities; Water Group gearing 59.8% of RCV (SWW 60.1%).
Cost of debt: effective rate c.5.6%; financing outperformance vs allowed cost supports returns.
Outlook: guiding c.60% y/y EBITDA uplift for FY 2025/26 and targeting 7% RORE.

Dividend growth trajectory

Policy is CPIH-linked growth; however, the per-share interim DPS is down (9.26p vs 12.14p restated) due to the larger post-rights-issue share base. The total cash distribution rises modestly (to £43.7m).
From this rebased level, future per-share growth should track CPIH if policy is maintained and performance remains on plan.

Sustainability assessment

Operational rebound supports the dividend: strong return to profitability (statutory PBT £65.9m), higher regulated revenues, and tight cost control.
Cash flow and balance sheet are adequate for current payout alongside heavy capex, aided by sizeable liquidity and investment-grade funding access.
Capital intensity remains elevated (FY capex guidance £710–£740m), and net debt increased to £4.34bn; however, gearing is within sector norms and supported by growing RCV.
Short- to medium-term cash taxes expected to be low due to capital allowances, which helps dividend funding through K8.

Capital allocation and structural considerations

Rights issue (January 2025) expanded the share count to c.472m; this mechanically reduced per-share dividends even as total cash paid increased.
Early acceptance of the PR24 Final Determination and entry into the K8 regulatory period, with a stated 7% RORE target and 30bps uplift to allowed equity return for an “enhanced” business plan.
Ongoing investment in Pennon Power to support decarbonisation and partially hedge energy cost risk; equity returns targeted at 11–15% on projects.

Risks and flags to dividend stability

Regulatory/legal exposure:
- Environment Agency prosecution (24 charges) with sentencing due March 2026.
- DWI court summons related to the May 2024 cryptosporidium incident (hearings in early 2026).
- Ongoing Ofwat investigations; potential remedies include undertakings or fines (up to 10% of regulated revenue in severe cases).
Execution risk on record capex and supply-chain delivery through K8; any material underperformance or ODI penalties could dilute headroom.
Financing risk from higher-for-longer interest rates partly mitigated by hedging and diversified debt book.
Management explicitly lists dividend reduction as a potential mitigation in severe stress scenarios (going concern disclosures).
Customer affordability pressures and revenue reprofiling (c.£20m shifted to 2026/27) could modestly affect near-term cash receipts.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
30/01/2025	04/04/2025	Interim	14.69p	GBX
24/07/2025	04/09/2025	Final	19.43p	GBX

Total (Annual Dividends Per Share): 34.12p

Dividend Yield = Annual Dividends Per Share (34.12p) ÷ Share Price (565p) = 6.04%

Ex Dividend Date	Payment Date	Type	Amount	Currency
26/02/2026	03/04/2026	Interim	9.2600p	GBX
24/07/2025	04/09/2025	Final	19.43p	GBX
30/01/2025	04/04/2025	Interim	14.69p	GBX
25/07/2024	05/09/2024	Final	30.33p	GBX
25/01/2024	05/04/2024	Interim	14.04p	GBX
20/07/2023	04/09/2023	Final	29.77p	GBX
26/01/2023	05/04/2023	Interim	12.96p	GBX
21/07/2022	05/09/2022	Final	26.83p	GBX
27/01/2022	05/04/2022	Interim	11.70p	GBX
22/07/2021	02/09/2021	Final	14.97p	GBX
05/07/2021	16/07/2021	Special	355.00p	GBX
28/01/2021	01/04/2021	Interim	6.77p	GBX
23/07/2020	02/09/2020	Final	30.11p	GBX
23/01/2020	03/04/2020	Interim	13.66p	GBX
25/07/2019	03/09/2019	Final	28.22p	GBX
24/01/2019	04/04/2019	Interim	12.84p	GBX
05/07/2018	04/09/2018	Final	26.62p	GBX
25/01/2018	04/04/2018	Interim	11.97p	GBX
06/07/2017	01/09/2017	Final	24.87p	GBX
02/02/2017	04/04/2017	Interim	11.09p	GBX
07/07/2016	02/09/2016	Final	23.12p	GBX
28/01/2016	01/04/2016	Interim	10.46p	GBX
06/08/2015	02/10/2015	Final	21.82p	GBX
29/01/2015	02/04/2015	Interim	9.98p	GBX
06/08/2014	03/10/2014	Final	20.92p	GBX
29/01/2014	03/04/2014	Interim	9.39p	GBX
07/08/2013	04/10/2013	Final	19.70p	GBX
30/01/2013	04/04/2013	Interim	8.76p	GBX

Year	Interim	Final	Special	Currency	Total	Change
2024	14.040	30.330		GBX	44.370	3.830
2023	12.960	29.770		GBX	42.730	10.900
2022	11.700	26.830		GBX	38.530	-89.770
2021	6.770	14.970	355.000	GBX	376.740	760.720
2020	13.660	30.110		GBX	43.770	6.600
2019	12.840	28.220		GBX	41.060	6.400
2018	11.970	26.620		GBX	38.590	7.310
2017	11.090	24.870		GBX	35.960	7.080
2016	10.460	23.120		GBX	33.580	5.590
2015	9.980	21.820		GBX	31.800	4.910
2014	9.390	20.920		GBX	30.310	6.500
2013	8.760	19.700		GBX	28.460

Number of Shares:

Payment	Paid	Amount
Next	–	–
Previous	–	–