Wolseley will return several hundred million pounds to shareholders this week as the building supplies group unveils its annual results.
The company is performing strongly in the US, a key market that is on the rebound, giving it enough cash to pay a special dividend of between £286m and £572m, according to analysts' forecasts. That translates into a range of 100p to 200p a share.
Wolseley has said in the past that it would consider returning excess cash to investors, and the strengthening US market means it now has the cash to pay such a special dividend.
The US accounts for about half its business and where housing starts have jumped by 25 per cent so far this year, compared with the same period in 2011. Wolseley declined to comment. The FTSE 100 company is expected to report annual profits of about £630m, up from £556m in 2011, on revenues of £13.5bn.
"We believe the market is increasingly expecting a special dividend given the significantly improved balance sheet," UBS said recently in a research note to clients.
Charlie Campbell, an analyst at Liberum Capital, said: "The US business grew nine per cent in the first nine months of the year. I think that growth might increase. It could be a dividend or share buyback."
Wolseley, the world's largest distributor of plumbing and heating products, employs 44,000 people in 23 countries. The company has indicated that it might write down the value of its European business.