NEW YORK (AP) -- Shares of H&E Equipment Services Inc. surged 14 percent ahead of the opening bell Tuesday after the construction equipment dealer said it would issue a $7 special dividend.
The company announced its board approved the dividend late Monday. It represented almost 40 percent of its stock price as of Monday's close. H&E expects to pay out a total of $246 million in dividends, payable on Sept. 19 to shareholders as of Sept. 5.
It will fund the payment through a debt offering.
In a note to clients Tuesday, KeyBanc Capital Markets analyst Joe Box reiterated his "Buy" rating on the stock. He said shares have long-term growth potential beyond the temporary bump as investors cheer the sizeable dividend.
He added that although the payment will increase its leverage and weigh on earnings, he still believes the company's stock is a good value because of H&E's potential to expand its equipment rental business and vendor deals.
The stock jumped $2.43, or 14 percent, to $19.93 in premarket trading early Tuesday. It closed Monday at $17.50. Its year-high is $21.
