New US Listing With A Surprising Dividend
I found a really interesting company the other day.
And it’s very confusing… so I wanted to talk about it.
Sunbelt Rentals (ticker: SUNB) just started trading on the NYSE in March.
But the company has been paying a dividend since 2012.
How is it possible for a company to just start trading, while also paying a dividend for more than 10 years?
Sunbelt Rentals used to be called Ashtead Group and traded on the London Stock Exchange.
Because most of its operations are here, Ashtead Group decided to change its name to Sunbelt Rentals and trade in the US.
Let’s get into the company’s operations.
Sunbelt Rentals is the second-largest equipment rental company in the US, trailing only United Rentals (ticker: URI).
The company operates around 1,600 stores across the US, Canada, and the United Kingdom.
Sunbelt Rentals rents out equipment ranging from forklifts and pumps to scaffolding and cooling fans.
Its customers include local governments, construction companies, and homeowners.
And more construction companies are choosing to rent equipment rather than own it, which means more business for Sunbelt Rentals.
LINK: https://www.equipmentworld.com/market-pulse/article/15755011/survey-contractors-lean-more-toward-renting-in-2025
Over the past decade, Sunbelt Rentals’ revenue grew by almost 15% on average each year.
How does Sunbelt Rentals’ dividend look?
The dividend chart above looks insane, especially for US investors.
But it’s completely normal in the United Kingdom.
Remember, Sunbelt Rentals used to trade as Ashtead Group in London, and most companies in the UK pay dividends twice per year rather than every quarter.
And UK companies’ second dividend, also called the final dividend, is usually much higher than their first.
It’s important to know the dividend chart above looks perfectly normal for a UK company.
It’s also hard to tell with the chart, but the total dividend payment increased every year, which is great.
Sunbelt Rentals’ next dividend payment is just around the corner.
The dividend will be $0.75, which is 5% higher than the same payment Sunbelt Rentals made last year.
But you need to own the stock by July 9 (Thursday) to get the $0.75 payment.
Now, I know what you’re thinking.
We’re US investors, and the dividend chart looks ridiculous.
We want stable dividend payments every quarter.
Well, I have great news.
Next year, Sunbelt Rentals will move its dividend to a quarterly payment schedule, which is what we’re used to with our other stocks.
You need to be very careful here.
Most websites are assuming the upcoming $0.75 payment will be paid every quarter.
But it isn’t true!
The $0.75 payment will be Sunbelt Rentals’ last payment using the semiannual schedule.
So, many websites have Sunbelt Rentals’ dividend yield around 4%, which is too high.
Actually, Sunbelt Rentals’ dividend yield is only around 1.5%, which seems low.
However, its dividend payout ratio is only 30%, which is well below the business services industry average.
Plus, Sunbelt Rentals’ return on equity (ROE) of 17% is more than double the industry average.
We need to be patient, but 15% revenue growth, an ROE of 17%, and a 30% dividend payout ratio are the perfect recipe for continued dividend growth.
Have you ever owned a stock changing its payment frequency?
It’s very rare!
Michael Jennings
Dividend Stocks Research
Category: Dividend Stocks To Buy?
