Ashtead keeps dividend streak alive as it focuses on cash

Russ Mould

16 June 2020

“Reports of a $1 trillion infrastructure plan from the White House in the USA could make it a doubly good day for investors in Ashtead, as the equipment hire specialist is already pleasing them with an unchanged final dividend for its financial year to April,” says Russ Mould, AJ Bell Investment Director. “That means the full-year payment is up very slightly on last year, to both confound analysts’ expectations of a cut and maintain an annual dividend growth streak that stretches back to 2006. Such a show of confidence is likely to go down well as shareholders wait to see how quickly industrial activity bounces back in the firm’s US, Canadian and UK markets.

Source: Company accounts. Financial year to April.

“Sacrifices have been made along the way, as capital investment budgets were pruned back, merger and acquisition activity curtailed and the share buyback programme suspended, over and above day-to-day cost reductions, but Ashtead makes it clear that it has not made anyone redundant and nor has it tapped Government-backed job retention schemes in the UK or Canada.

“This focus on cash generation is helping the firm – and its investors – come through the downturn and meet key bills such as lease payments and also the £240 million interest charge on its £4.3 billion net debt position, because trading became much tougher in the final three months of the year.

“That can be seen from the 7% dip in the stated full-year pre-tax profit figure to £983 million, the first year-on-year decrease since 2011, which was the result of a 52% fall in the fourth and final period.

Source: Company accounts. Financial year to April.

“The good news is that the size of the fleet available to rent at Sunbelt, the US operation which provided 85% of group sales and more than 90% of profits last year, started to stabilise in mid-April and it has since grown as the business had adopted to new working practices.

“However, rental revenue at Sunbelt fell 3% in March, 12% in April and 14% in May so shareholders will be hoping for a pick-up in the second half of 2020 and beyond. Before today’s figures analysts were looking for a sharp drop in profits in the year to March 2021 and a dividend cut.

Source: Company accounts, Sharecast, consensus analysts’ forecasts. Financial year to April.

“President Trump’s reported $1 trillion infrastructure spending plan could help here, as it should play straight to Ashtead’s core strengths. Its equipment will be needed if such schemes are to be implemented quickly and it will be interesting to see if US industrial sentiment surveys start to pick up more rapidly. If so, that has traditionally been a good sign for Ashtead’s shares, although the White House will still have to persuade Congress of the merits of adding in the short term to an already huge annual budget deficit and finalise the details of where such fiscal largesse will be spent.

Source: Refinitiv data, ISM, CIPS/Markit

“Any pre-election boondoggle could help Ashtead in its quest to maintain cashflow and keep that dividend streak going even further. For the moment, Ashtead’s decision to offer an unchanged second-half dividend and increased final one means it becomes the 48th FTSE 100 firm to declare an unchanged or increased payment for its last financial year, against 48 that have cut, deferred, suspended or cancelled their distribution. Pending shareholder approval at the AGM, the 33.5p dividend will be paid on 11 September.”

The full list of FTSE 100 dividend cutters and keepers announced so far in 2020

	Dividend (pence)		Last dividend event
	2019E	2020E	H2 2019	Special	H1 2020	Comment
3i	35.00	37.88	Declared			H2 to be paid 17 July (unchanged)
Admiral Group	119.30	128.66	Paid	Cancelled		Ordinary dividends for H2 2019 paid. Special dividend of 20.7p for H2 2019 cancelled
Anglo American	85.05	61.75	Cut			H2 dividend cut
Antofagasta	13.89	9.29	Cut			H2 2019 dividend cut
Ashtead	36.29	36.84	Declared			Unchanged H2 dividend and full-year increase announced. To be paid 11 September
Associated British Foods	46.35	15.44			Cancelled	H1 2019-20 dividend cancelled
AstraZeneca	218.47	232.08	Paid			H2 dividend paid 30 March (unchanged)
Auto Trader	4.82	4.83	TBC			H2 2019-20 dividend under review; FY results due on 25 June
Avast	11.69	11.53	Declared			H2 to be paid 24 June (increased)
AVEVA	44.50	44.61	Declared			H2 to be paid 11 August (unchanged)
Aviva	9.50	31.08	Cancelled			H2 2019 dividend cancelled
BAE Systems	9.40	23.25	Cancelled			H2 2019 dividend cancelled
Barclays	3.00	2.61	Cancelled		Cancelled	Q4 2019 and Q1 2020 dividend cancelled
Barratt Developments	46.40	18.71	Cancelled			H2 2019 dividend cancelled
Berkeley	142.09	241.06	Confirmed			Confirmed final, plus £140.1 million in dividends and buybacks confirmed by Sept'2020. Results on 19 June.
BHP Group	103.77	93.58	Paid			H1 2019-20 paid on 24 March
BP	31.99	32.09	Paid		Paid	Q4 2019 and Q1 2020 unchanged dividends paid
British American Tobacco	210.40	219.69	Paid			Q4 2019 paid (increased) and no change planned to 2020 pay-out ratio
British Land	15.96	17.09	Cancelled			Q3 and Q4 2019 cancelled
BT	4.62	0.00	Cancelled		Cancelled	H2 2019-20 and FY 2020-21 dividends cancelled
Bunzl	15.50	41.95	Cancelled			H2 2019 dividend cancelled
Burberry	11.30	26.21	Cancelled		Cancelled	H2 2019-20 and H1 2020-21 dividends cancelled
Coca-Cola HBC	54.16	47.27	Declared			H2 to be paid 28 July
Compass	40.00	0.00			Cancelled	H2 2019 paid 24 February (increased). FY 2020 cancelled.
CRH	72.50	75.71	Paid			H2 2019 paid 28 April
Croda	90.00	94.71	Paid			H2 2019 paid 28 May (increased)
DCC	145.27	146.43	Declared			H2 2019 to paid 23 July (increased)
Diageo	68.60	68.99	Paid			H1 2019-20 paid on 9 April (increased)
Evraz	58.52	25.77	Paid			H2 2020 paid on 27 March (unchanged)
Experian	36.67	40.59	Declared			H2 to be paid on 24 July (unchanged)
Ferguson	162.45	111.75			Cancelled	H1 2019-20 cancelled
Flutter Entertainment	200.00	0.00			Cancelled	H2 2019 paid in scrip, FY 2020 cancelled
Fresnillo	11.70	11.79	Cut			H2 2019 paid 2 June (cut)
GlaxoSmithKline	80.00	80.00	Paid		Declared	Q4 2019 paid on 9 April (unchanged). Q1 2020 to be paid on 9 July (unchanged).
Glencore	0.00	7.50			Deferred	Decision on planned $0.20 payment deferred until Q3
GVC	17.60	19.07	Cancelled			H2 2019 payment cancelled
Halma	16.71	17.75	TBC			FY results on 14 July
Hargreaves Lansdown	42.00	44.00	Paid			H1 2019-20 dividend paid 9 March (increased)
Hikma Pharmaceutical	34.33	36.91	Paid			H2 2019 dividend paid 7 May (increased)
Homeserve	23.60	24.47	Declared			H2 2019-20 to be paid 3 August (increased)
HSBC	23.41	12.04	Cancelled		Cancelled	Q4 2019 and Q1 2020 dividend cancelled
Imperial Brands	206.60	137.70	Cut			H1 2019-20 payment cut. To be paid
Informa	7.55	9.25	Cancelled			H2 2019 cancelled
InterContinental Hotels	32.00	31.12	Cancelled			H2 2019 cancelled
Intermediate Capital Group	50.80	53.52	Declared			H2 2019-20 to be paid 5 August (increased)
International Cons. Airlines	11.70	0.00	Cancelled			H2 2019 dividend cancelled
Intertek	105.80	91.65	Paid			H2 2019 dividend paid 11 June (increased)
ITV	2.60	2.83	Cancelled			H2 2019 dividend cancelled
JD Sports Fashion	0.28	0.83	Cancelled			H2 2019 dividend cancelled
Johnson Matthey	55.63	62.78	Cut			H2 2019 dividend halved; to be paid on 4 August
Just Eat Takeaway.com	0.00	0.00	Zero			None declared or expected
Kingfisher	3.33	4.23	Cancelled			H2 2019 dividend cancelled
Land Securities	23.20	28.83	Cancelled			Q3 and Q4 2019 cancelled
Legal and General	17.57	18.06	Paid			H2 2019 dividend paid 4 June (increased)
Lloyds	1.12	1.05	Cancelled		Cancelled	Q4 2019 and Q1 2020 dividend cancelled
London Stock Exchange	70.00	75.15	Paid			H2 2019 dividend paid 27 May (increased)
M & G	11.92	18.60	Paid	Paid		Debut H2 and special both paid 29 May
Melrose Industries	1.70	1.32	Cancelled			H2 2019 dividend cancelled
Mondi	23.83	56.99	Cancelled			H2 2019 dividend cancelled
Morrison (Wm)	6.77	7.36	Declared	Deferred		H2 2019-20 dividend to be paid 29 June (increased). Decision on special dividend deferred
National Grid	48.72	49.96	TBC			FY results on 18 June
Next	167.50	0.00			Cancelled	FY 2020-21 dividends cancelled
Ocado	0.00	0.00	Zero			None declared or expected
Pearson	19.50	18.02	Paid			H2 2019 dividend paid 7 May (increased)
Pennon	43.77	45.69	Declared			H2 2019-20 to be paid 2 September (increased)
Persimmon	0.0	110.0	Cancelled	Cancelled		Final and special dividend both cancelled for 2019
Phoenix Group	46.8	47.4	Paid			H2 dividend paid 19 May (unchanged)
Polymetal	48.4	83.1	Paid			H2 dividend paid 29 May (increased)
Prudential	36.09	33.90	Paid			H2 dividend paid 15 May (lower owing to change in corporate structure)
Reckitt Benckiser	174.60	176.11	Paid			H2 dividend paid 28 May (increased)
RELX	45.70	45.70	Paid			H2 dividend paid 28 May (increased)
Rentokil Initial	1.51	3.74	Cancelled			H2 2019 dividend cancelled
Rightmove	2.80	4.67	Cancelled			H2 2019 dividend cancelled
Rio Tinto	298.05	252.83	Paid	Paid		Special dividends paid 3 July and 8 August 2019. H2 dividend paid 16 April.
Rolls Royce	4.60	3.67	Cancelled			H2 2019 dividend cancelled
Royal Bank of Scotland	2.00	1.50	Cancelled	Cancelled	Cancelled	Q4 2019, special and Q1 2020 dividend cancelled
Royal Dutch Shell	146.69	50.10			Cut	Q4 2019 paid unchanged. Q1 2020 cut and to be paid 22 June
RSA Insurance	7.50	25.19	Cancelled			H2 2019 dividend cancelled
Sage	16.91	16.53	Paid		Paid	H1 2019-20 dividend paid 12 June (increased)
Sainsbury	3.30	10.37	Cancelled			H2 2019-20 dividend cancelled
Schroders	114.00	114.00	Paid			H2 2019 dividend paid 7 May (unchanged)
Scottish Mortgage Inv. Trust	3.25	3.38	Declared			H2 2019-20 dividend to be paid 1 July (increased)
SEGRO	20.70	22.48	Paid			H2 2019 dividend paid 1 May (increased)
Severn Trent	100.08	101.76	Declared			H2 2019-20 dividend to be paid 17 July (increased)
Smith & Nephew	29.65	32.40	Paid			H2 2019 dividend paid 6 May (increased)
Smith DS	13.24	14.88	TBC			FY results on 4 July
Smiths Group	45.90	26.29			Cancelled	H1 2019-20 dividend cancelled
Smurfit Kappa	24.37	95.31	Cancelled			H2 2019 dividend cancelled
Spirax-Sarco Engineering	110.00	116.54	Paid			H2 2019 dividend paid 22 May (increased)
SSE	78.24	82.19	Confirmed			Confirmed FY payment of 80p for 2019-20. Results on 17 June
Standard Chartered	5.68	14.49	Cancelled		Cancelled	Q4 2019 and Q1 2020 dividend cancelled
Standard Life Aberdeen	21.60	21.60	Paid			H2 2019 dividend paid 19 May (unchanged)
St. James's Place	40.49	40.49	Cut			H2 2019 dividend paid 27 May (cut)
Taylor Wimpey	3.84	7.15	Cancelled	Cancelled		Special and H2 2019 dividends cancelled
Tesco	9.15	8.37	Declared			H2 2019-20 dividend to be paid 3 July (increased)
Unilever	142.76	150.83	Paid		Paid	Q1 2020 dividend paid 4 June (increased)
United Utilities	42.60	43.23	Declared			H2 2019-20 dividend to be paid 3 August (increased)
Vodafone	7.86	8.02	Declared			H2 2019-20 dividend to be paid 7 August (unchanged)
Whitbread	32.65	45.28	Cancelled			H2 2019 dividend cancelled
WPP	22.70	29.47	Cancelled			H2 2019 dividend cancelled

TOTAL (£ billion)	74.8	63.0
Growth %	(11.2%)	(15.8%)
Growth in £	(9,481)	(11,832)

Source: Company accounts. 48 FTSE firms have cut, suspended, deferred or cancelled payments, 48 have retained or increased them, five have yet to comment and two (Just Eat Takeaway and Ocado) do not pay dividends. The total is 102 because both Admiral and Morrison paid ordinary dividends but deferred or cancelled special dividends so they both feature twice.

Russ Mould

Investment Director

Russ Mould’s long experience of the capital markets began in 1991 when he became a Fund Manager at a leading provider of life insurance, pensions and asset management services. In 1993, he joined a prestigious investment bank, working as an Equity Analyst covering the technology sector for 12 years. Russ eventually joined Shares magazine in November 2005 as Technology Correspondent and became Editor of the magazine in July 2008. Following the acquisition of Shares' parent company, MSM Media, by AJ Bell Group, he was appointed as AJ Bell’s Investment Director in summer 2013.

Contact details

Mobile: 07710 356 331
Email: russ.mould@ajbell.co.uk