Set-top box maker Pace (PIC) is rapidly turning into a cash cow that could increase its dividend by 15% to 25% in each of the next three years and might even reward investors with a one-off distribution.

Only part way through a self-help process designed to bolster margins and cash generation, the £800 million cap is close to wiping out its borrowings entirely having paid off another $95.1 million (£59.1 million) in the first half leaving just $68.2 million (£42.4 million) of net debt on the balance sheet. The borrowings slate should be clean by the December year end, and that will leave a business expected to generate free cashflow (FCF) of at least $165 million (£103 million).

Dividend per share is already on a rapidly rising trajectory, with analysts at Canaccord anticipating this year’s payout to hit 3.5p per share before rising to 4.2p and 4.8p through to 2015. Last year’s payout was the equivalent of 2.8p. However, matching these expectations will not put cash under pressure.

The forecast 2014 full-year dividend of 4.2p per share is calculated to cost just over £12.6 million, less than 13% of the firm’s anticipated FCF that year. With the pay-TV market increasingly tough for new entrants to break in to management is confident of meeting market hopes even with real growth likely to remain limited.