Vulcan Materials Hires New CEO, Hikes Dividend Again

The board of directors at Vulcan Materials Company VMC recently announced the appointment of a new Chief Executive Officer CEO. Also, the largest producer of construction aggregates in the U.S. announced a quarterly dividend on Friday — the second increase this year.

On Monday, Vulcan Materials announced the appointment of J. Thomas Hill, 55, as President and CEO of the company. Hill, who served as Executive Vice President and Chief Operating Officer of Vulcan Materials, replaces Donald James, 65.

Last week, the company announced that it will pay a quarterly dividend of 6 cents per share in Sep 2014, versus 5 cents paid in May. The quarterly dividend is equivalent to an annual dividend of 24 cents per share, yielding 0.4% annually. The increased quarterly dividend will be payable on Sep 10, 2014, to shareholders of record as on Aug 27.

Earlier in February, Vulcan Materials increased the quarterly dividend by 400% from 1 cent to 5 cents.

We believe Vulcan Materials' improved liquidity position following the sale of non-core cement and concrete businesses in Florida, reduction in debt and improved earnings from the Profit Enhancement Plan are responsible for the back-to-back dividend increases.

Under the Profit Enhancement Plan, Vulcan Materials divested non-core assets, improved earnings and cash flows, paid off debts and thereby strengthened its overall credit profile. With the sale of non-core cement and concrete businesses in Florida to Cementos Argo for $720 million in March, the company achieved the goals laid down under the plan. These initiatives implemented over the past two years have increased adjusted EBITDA by $116 million, generated more than $1 billion from the sale of non-strategic assets and future sales production agreements and reduced total debt of approximately $800 million.

Other Stocks to Consider

Vulcan Materials carries a Zacks Rank #3 (Hold). Other stocks in the building construction/materials sector worth considering include Martin Marietta Materials Inc. MLM, D.R. Horton, Inc. DHI and Toll Brothers, Inc. TOL. All three stocks carry a Zacks Rank #2 (Buy).