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What’s Led to Vulcan Materials’ Upward Dividend Yield Curve

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Nov. 8 2017, Updated 2:57 p.m. ET

Vulcan’s dividend yield

Vulcan Materials’ (VMC) 100% dividend-per-share growth in 2016 has been followed by 25% growth in 2017. Its dividend yield curve has sloped upward due to growth in its dividend per share and a sharp drop in its stock price growth. Its stock price has risen 1% YTD (year-to-date), compared with 32% in 2016. The company, like the overall industry, is eager to take part in Donald Trump’s trillion-dollar infrastructure plans.

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Comparing Vulcan and broad indexes

Vulcan Materials has a PE (price-to-earnings) ratio of 40.6x and dividend yield of 0.8%, while the sector’s average PE ratio is 26.5x, and its dividend yield is 0.8%. The S&P 500 (SPX-INDEX) (SPY) offers a dividend yield of 2.3%, PE ratio of 22.6x, and YTD return of 15.6%. The Dow Jones Industrial Average (DJIA) (DIA) has a dividend yield of 2.3%, PE ratio of 21.1x, and YTD return of 19.1%. The NASDAQ (COMP-INDEX) (ONEQ) has a PE ratio of 25.3x and YTD return of 25.7%.

The PowerShares International Dividend Achievers ETF (PID), a dividend fund, has 50% and 1% exposure to Europe and basic materials, respectively. It has a 3.6% dividend yield and a PE ratio of 15.1x. The ALPS Sector Dividend Dogs ETF (SDOG) has 9% exposure to basic materials, a 3.3% dividend yield, and a PE ratio of 16.3x.

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