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CSR Limited (ASX:CSR) shares: Modest upside potential and above-average dividend yield

Story Highlights

CSR Limited is an established supplier of building products to home and commercial buildings construction markets. The company is returning cash to shareholder through a buyback program and the stock is offering an above-average dividend yield.

Although CSR Limited (ASX:CSR) shares are still sharply below where they began the year, they have been rising recently.

CSR shares have risen about 7% over the past week. TipRanks insights show modest upside potential for the stock and an above-average dividend yield.

Sydney headquartered CSR Limited manufactures building products. It supplies home and commercial buildings construction markets. The company, which serves Australian and New Zealand markets, has been in business since 1855.

CSR Limited’s share buyback program continues

As part of an effort to improve shareholder value, CSR Limited launched a $AU100 million share repurchase program. In the latest transaction, the company bought back nearly 86,000 shares of its stock and spent $AU386,947 on the repurchase. It bought the shares at prices of between $AU4.49 and $AU4.54. CSR Limited’s repurchase program is enabled by the company’s strong balance sheet. 

CSR Limited’s 7.48% dividend yield towers over sector average

CSR Limited announced a final dividend of $AU0.18 per share for its fiscal 2022. The stock currently offers a dividend yield of 7.48%, well above the sector average of 1.64%. CSR Limited’s 44.8% payout ratio shows a disciplined dividend program as only less than half of the company’s profit goes into funding the distribution. The company’s net profit after tax rose 20% from the previous year to $AU193 million in fiscal 2022. 

CSR Limited’s share price target

CSR Limited’s shares have declined about 23% year-to-date. According to TipRanks’ analyst rating consensus, CSR stock is a Moderate Buy. The average CSR Limited price target of $5.33 implies over 12% upside potential.

CSR stock is seeing favorable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 100% Bullish on CSR, compared to a sector average of 67%.

Final thoughts

In addition to returning cash to shareholders, CSR Limited’s share repurchase program may also make the remaining shares more valuable over time due to scarcity. CSR Limited’s above-average dividend yield is likely to also appeal to income-seeking investors.

Disclosure

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