Ashtead shares soar after it maintains dividend

The British industrial equipment supplier saw its share price soar on Tuesday after the company announced that it will maintain its dividend pay-out to shareholders, bucking the trend of other FTSE 100 companies this year.

Ashtead Group saw its share price soar on Tuesday after the company announced that it will maintain its dividend, bucking the trend of other cash strapped FTSE 100 companies who have opted to cancel pay-outs this year.

So far this year, around 42% of total dividend payments in 2020 have been cut or cancelled by British blue-chips in a bid to offset the economic impact of the Covid-19 pandemic – wiping out approximately £26.5 billion in pay-outs to shareholders.

The British industrial equipment supplier wowed investors by maintaining its dividend this year, helping its stock close nearly 10% higher on Wednesday.

Even though Ashtead admitted that business was subdued by the outbreak throughout the latter half of March and into April, the company remained relatively busy, with it continuing to rent equipment to construction sites that remained open during lockdown.

Group sales for the year to April climbed 9% higher to break above £5 billion. Underlying pre-tax profit came in 4% lower at £1.1 billion, but the fall in earnings was offset by Ashtead maintaining a dividend of 33.5p a share, returning a total of 40.65p over the last 12 months of trading.

Ashtead close at £26.49 per share on Tuesday.

FTSE 100 rebounds back through key resistance level

The FTSE 100 received a boost from the US Federal Reserve (Fed) yesterday, with the break through 6186 bringing about a more bullish outlook after recent declines, according to Josh Mahony, senior market analyst at IG.

‘The recent selloff took us into and below the 61.8% Fibonacci support level last week, yet we are starting to now see the wider bullish trend coming back into play once again,’ he said. ‘The big question here is whether we continue to rebound and ultimately regain the 6515 level.’

‘That remains to be seen, with markets likely to continue following the direction of coronavirus cases as a gauge of whether a second wave is impending,’ Mahony added. ‘For today, we are finding support from the breakout level of 6186.’

The ability to remain above that level would point towards further gains, whereas a breakdown below the 80 threshold on the four-hour chart could bring another bout of downside.

Investors believe stock market is ‘overvalued’

According to a recent survey carried out by Bank of America (BofA), 98% investors said that they think the financial markets are ‘overvalued’ after rebounding from March lows due to global governments stimulus packages to offset the economic impact of the Covid-19 pandemic.

Cash levels at fund managers fell in June to 4.7%, down from 5.7% the month prior, with 93% of investors surveyed admitting they were growing increasingly concerned about the prospect of a prolonged recession.

BofA said in the report that the recent rise in investor optimism remains ‘fragile’ and unlikely to be maintained amid the myriad of macroeconomic headwinds.

How to trade stocks with IG

Looking to trade the Ashtead and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Ashtead’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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