The money is just going to “keep rolling in” to Rightmove – provided that agents stay afloat.
George Salmon, of Hargreaves Lansdown, says that Rightmove accounts for around four out of every five minutes spent on property portals, and that 94% of sellers expect their property to be listed on the portal.
He said in a note to investors: “The group charges a fixed fee per estate agent per month.
“With almost all of the UK’s agents signed up, growth is now coming from annual price increases and upselling additional services.
“However, the agents who have to stump up the extra fees have been struggling recently.
“With wider concerns over the stability of the housing market post-Brexit, and rising competition from online estate agents, some may worry that Rightmove risks biting the hand that feeds it.”
He goes on: “Having coped easily with challenges from Zoopla and OnTheMarket, Rightmove remains the dominant player.
“For estate agents, it often comes down to a simple choice between paying the Rightmove fee, or selling fewer properties.
“If budgets do need to be cut, we feel the still significant print advertising budget is a more obvious target, rather than taking the risk of not featuring on Rightmove.
“Viewed from this perspective, provided the agents stay afloat, it’s easy to see why the revenue should keep rolling in.
“With net cash on the balance sheet, there is little reason to suspect that Rightmove will do anything other than continue returning all of its excess cash to shareholders in the foreseeable future. The prospective yield is 1.4% at present, but analysts expect steady dividend increases from here.”
Rightmove has a current market capitalisation of nearly £3.7bn, with shares trading yesterday at around £40.
The Hargreaves Lansdown report also looks at two other portals, Just Eat and Auto Trader. It says that all three are clear leaders in their respective markets.