In last week’s SIF update I tweaked my screen to find new stocks and found that electricity utility Drax was a near-perfect match for the buying criteria I use in this rules-based portfolio.

This week I’ve tried a slightly different approach, stripping out my dividend requirements to find companies whose payouts were suspended last year but which otherwise pass all of my tests. I was hoping to find a company whose dividend is expected to resume this year in line with pre-pandemic levels, rather than being rebased -- or cut, as you and I might call it.

Car dealership group Vertu Motors (LON:VTU) ticked all of the boxes in my screen except for a dividend payout. Fortunately, management have already said they’re confident dividend payments will be resumed for the current (FY22) financial year. Broker forecasts suggest a payout of 1.6p per share this year, only marginally below the FY20 payout of 1.65p per share. 

(Of course, these are only forecasts at this stage, but I feel it’s reasonable to compare them with similar forecasts for other companies which suggest material dividend cuts are likely when payouts resume.)

Vertu Motors (LON:VTU)

AIM-listed Vertu was founded by CEO Robert Forrester in 2006, to act as a consolidator of UK motor retail businesses. Its best-known brand is probably Bristol Street Motors, but Vertu also operates under a number of other brands. The company says it is now the fifth-largest motor retailer in the UK, with 149 outlets representing many of the major manufacturers. 

The three executive directors all worked together at dealership group Reg Vardy until 2006, when that company was sold to listed operator Pendragon

Vertu has a market cap of £163m and turnover of £3.1bn, pre-pandemic. Margins are low, as is the norm in this sector, but the group has a strong balance sheet and has historically been quite cash generative.

Stockopedia’s algorithms like the stock, awarding it a StockRank of 98 and Super Stock status. 

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I’ve taken a look at the numbers behind these factor scores to find out more. Should I add Vertu Motors to SIF?

Value: below net asset value

Car dealership groups usually trade on modest multiples of earnings, so I’d expect Vertu to score well for…

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