This Dividend Stock Just Jumped 10%! Time to Buy?

This dividend stock is way up after being included in a major index, making it a prime time to pick up the auctioneer.

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Sometimes it can be hard to decipher why a dividend stock suddenly sees a surge in share price. When there are no major company announcements, or no earnings in view, investors might wonder as to why shares of a stock might jump in a day.

Luckily, in the case of RB Global (TSX:RBA) there certainly is a reason. But again, not due to company news or earnings. So let’s take a look at why this dividend stock with a 1.4% yield just soared in share price.

What happened

The surge in RB Global’s shares can be attributed to its inclusion in the S&P MidCap 400 Index as announced by S&P Dow Jones Indices. When a company is added to a major index like the S&P MidCap 400, index funds that track this index need to purchase shares of the newly included company to adjust their portfolios accordingly. This increased demand typically leads to a rise in the stock price.

Furthermore, being part of a well-known index raises a company’s profile and is often seen as a mark of credibility and stability. This can attract more investors, including institutional investors who prefer or are required to invest in index components.

The index inclusion is generally viewed positively by the market. It signals that the company has met certain standards and criteria, which can boost investor confidence. Stocks that are part of major indices tend to have higher trading volumes, which improves liquidity. This is attractive to investors as it makes it easier to buy and sell the stock without significantly affecting its price.

About RB Global

So, should you be interested in RB Global stock after its inclusion? Let’s learn more about the stock itself. RB Global, Inc. is a prominent global marketplace for commercial assets and vehicles. It provides value-added transaction solutions, insights, and services for buyers and sellers across various sectors, including automotive, commercial transportation, construction, government surplus, lifting and material handling, energy, mining, and agriculture. The company’s portfolio includes several well-known brands, each contributing to its diverse service offerings.

Then in 2023, Ritchie Bros. acquired IAA, Inc., a leading global digital marketplace for vehicle buyers and sellers, enhancing its capabilities in the automotive sector. This acquisition was a significant milestone, enabling the company to offer a more comprehensive range of services and strengthen its position in the market.

RB Global continues to innovate and expand its services, leveraging technology to provide efficient, transparent, and effective solutions for its customers worldwide. It includes various brands from the largest auctioneer of industrial equipment and trucks, to asset management and equipment lifecycle support.

Bottom line

The outlook is strong for RB stock even after this recent rise in share price. RB Global has reported significant year-over-year growth in various key metrics. For instance, in the first quarter of 2024, the company’s Gross Transaction Value (GTV) increased by 115%, driven by the inclusion of IAA’s results and strong performance in the commercial construction and transportation sectors.

Furthermore, the acquisition of IAA, Inc. in 2023 has bolstered RB Global’s capabilities in the automotive sector and expanded its service offerings. This acquisition is expected to drive future growth by leveraging synergies between the two companies and enhancing the overall value proposition for customers.

And, of course, RB Global’s recent inclusion in the S&P MidCap 400 Index has increased its visibility and credibility among investors. This inclusion typically leads to increased demand from index funds and institutional investors, providing additional support for the stock price. So with shares up and a solid dividend, it’s a great time to consider the stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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