Car and property bridging finance provider S&U (LON: SUS) is paying a final dividend of 50p a share. This goes against the trend of other companies not paying dividends, but management is confident that the dividend is affordable even under current trading conditions due to COVID-19.

That is lower than the previous year’s final of 51p a share, but it means the total dividend for 2019-20 is 2% higher at 120p a share. This maintains the record of growing dividends.

S&U is not applying for money through any government schemes so there is no quandary about paying a dividend. There is continual stress testing of collections and sales.

There are inevitable signs of a sharp reduction in lending in the past few weeks. This will hamper growth in the medium-term, but S&U has tightened its lending criteria over the past couple of years and this should limit problems with payments. That does depend on how long trading conditions remain as they are.

The experienced management team provides some comfort for investors, although it will not have seen conditions like this before.

2019-20

In the year to January 2020, pre-tax profit was 2% ahead at £35.1m. That included a higher contribution from Aspen the property bridging finance provider. The core car finance business still contributes most of the profit, though.

There were delays in obtaining repayments for bridging loans and, given the current property market, the delays are likely to get worse for the time being.

Gearing was 65.7% at the end of January 2020. There is around £37m of headroom in the borrowing facilities.

Management is optimistic that when trading conditions return to normal there should be a quick recovery in business. Investment in digital systems and diversifying the source of new business will help the business in the longer-term.

At 1745p, the share price is around two-thirds of its high in February. The yield is 6.9%.

The final dividend is payable to shareholders on the register on 19 June, assuming it is agreed at the AGM. That means that there is still plenty of time to buy the shares to get the dividend.