Are These Dividend Stocks Solid As Concrete?

Investing In Cement Industry Dividend Paying Stocks

 

By any standard the worldwide cement industry is enormous. Last year total revenues exceeded an eye popping $250 billion. Though a highly polluting and energy intensive business, the cement industry is important for virtually every economy on the planet. Besides manufacturing and distributing cement, many companies in this industry also supply various construction materials, wallboard and paperboard. It’s no surprise that expanding economies are the biggest consumer of these materials as housing and other construction booms require huge quantities of this matter. As one might expect, China accounts for about half of the global demand for cement and related products.

 

While there are many cement companies that exist, only a handful offer dividend payments that one might consider adding to a dividend income portfolio. This quasi-industrial sector may be considered for added diversification beyond the standard dividend paying stocks many of us already invest in. Let’s examine a few of these dividend paying companies sorted by smallest yield to largest.

 

First up, Eagle Materials Inc. EXP. EXP manufactures and distributes building products used in residential, industrial, commercial and infrastructure construction. Like many cement companies, EXP diversifies its offerings by operating in different segments that include cement, wallboard, paperboard and various aggregates. Currently yielding a tiny 0.40% with an equally small payout ratio of just 10.8%, EXP has a trailing PE of 41.53 making it quite expensive relative to the S&P but within range relative to peers. The recent housing recovery and building boom that has occurred over the last five years no doubt contributed to an overall demand for cement companies and their stock as share prices have definitely jumped in front of future earnings. Forward PE looks much more reasonable at only 19.22. Time will tell if an overall slowdown will be occurring in the building and housing sector which will no doubt lower stock prices, increase yield and bring PEs back down to Earth.

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Disclosure: Long none of the above.

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