skip to Main Content
Get your free newsletter: Actionable insight each morning for self-directed investors. 

Shares in Heating and Plumbing supplier Ferguson top the FTSE this morning after H1 results, driven by strong US residential markets, were accompanied by welcome confirmation of a $1bn special dividend (circa 5%) to be paid with proceeds of its sale of Nordic building materials distributor Stark.

Whilst the former maintains the positive corporate message that took shares to Jan’s mid-month peak, the latter boosts cash returns to a very healthy circa 7.5%, making it difficult to ignore for those hunting the combination of solid, growing FTSE businesses with attractive yields.

Nit pickers might point to H1 organic growth of 7.4% implying a slowing to 7.3% in Q2 versus 7.6% in Q1, perhaps attributable to some minor seasonality.

On the flip-side, FX benefits have risen (the business reports in USD, not GBP), taking ongoing revenue growth from 10% in Q1 to 10.3% in H1 (9% once FX benefits stripped out), implying acceleration to 10.6% in Q2.

More importantly, growth in ongoing trading profit accelerated to +15% in H1 (14.4% ex-FX) versus 13.9% in Q1, implying something akin to 16% in Q2, and thus handsome margin expansion, even if exceptionals halved growth in pre-tax profits (7.6%).

Today’s share price reaction is thus understandable, driven by the aggregate of returns and outlook, with confirmation of that chunky special dividend ($1bn, or $4 per share, offset by a share price consolidation to avoid an ugly drop and gap on the chart), continuation of the ongoing $650m share buyback programme (50% complete; helped flatter EPS growth to 16.6%), another 10% hike for the interim dividend (same as last year) and management’s confidence in meeting broker FY consensus (despite H2 having tougher comparables; US strength/Canadian health offsetting a challenging UK).

A tidy set of results, a chunky return of capital and management in the luxurious position to be being able to talk of more positives than negatives.

Become a better investor with SharePad Designed to give you the confidence to pick your own investments, Sharepad gives you access to a wealth of information on UK, US & European stocks. Find out more

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Mike Van Dulken

Mike van Dulken

Accendo Markets’ Mike van Dulken has worked in the City since 2002, with some of the biggest names in the City. His career kicked off at Jefferies as an equity analyst before a 2007 move to Société Générale saw him help service hedge funds with short-term trade ideas during the financial crisis.

Head of Research at Accendo since 2010, covering shares, indices, commodities and FX, he is regularly quoted in the financial press. Accendo Markets has been voted Best CFD research Service by ADVFN in 2017 and 2018.

Stocks in Focus

Here are some of the smaller companies we are following most closely. They all represent significant growth stories in our view. Our in-depth reports go into more detail on why we like them.


A date for your diary

On the 21st of October, Stuart Fieldhouse will be joining Sarah Lowther and Mark Watson-Mitchell to discuss which small cap investments they like the look of and, perhaps, which ones they do not. It promises to be a lively and insightful discussion. If you are interested in investing in small cap stocks then this could be a profitable use of your time. We hope you can make it! Sign up now

Get your free daily newsletter: 

Thanks to our Partners

Our partners are established, regulated businesses and we are grateful for their support.

FP Markets
Trade Nation
Back To Top