Go-Ahead raises dividend for first time in six years

(Adds CEO, analyst comment, share price)

By Sarah Young

LONDON, Sept 4 (Reuters) - British transport company Go-Ahead lifted its dividend for the first time since 2008 after making progress towards a profit target and winning a new rail contract, prompting hopes of further dividend increases.

Fresh from winning Britain's biggest rail franchise, the Thameslink contract around London, Go-Ahead said on Thursday it would raise its full-year dividend by 4.3 percent to 84.5 pence a share after operating profit jumped 19 percent in the twelve months to June 28.

"Profit's up, good revenue growth and being on target and winning tenders so that's given us the confidence to do it. We hope there will be more to come," Chief Executive David Brown said in an interview.

Go-Ahead shares climbed 3.2 percent to 2,345 pence, making the company one of the biggest risers on Britain's midcap index. The stock is up 34 percent since the beginning of the year, helped by the Thameslink win.

"We expect that the dividend per share will be increased progressively from now on," said Investec (LSE: INVP.L - news) analyst John Lawson, who has a "buy" rating on Go-Ahead shares.

Lawson (Other OTC: LWSOF - news) raised his estimate for the dividend for the next financial year to 89 pence from 81 pence.

Go-Ahead reported operating profit of 103.2 million pounds ($170 million) for its financial year, compared with the 86.7 million pounds a year earlier, after carrying record numbers of passengers on buses and trains in Britain.

Brown said Go-Ahead had attracted more passengers by investing in smart, new and more fuel-efficient vehicles equipped with wifi and smart card technology to make paying easier.

The company said it was on track to meet its target of generating 100 million pounds of operating profit from its bus business by the 2015/16 financial year. The company runs buses in London as well as in other parts of eastern and southern England. (1 US dollar = 0.6079 British pound) (Reporting by Sarah Young; editing by Mark Potter and Tom Pfeiffer)