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Martin Marietta (MLM) Cheers Investors With 7% Dividend Hike

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In a shareholder-friendly measure, Martin Marietta Materials, Inc. (MLM - Free Report) announced a hike of 7% in its quarterly cash dividend. This move highlights the company’s sound and stable financial position and its commitment to reward shareholders regularly. The company has been driving shareholder value through regular dividend payments, share repurchase programs, reinvesting in business, and selectively pursuing acquisitions with the right fit and return.

Martin Marietta raised the dividend payout to 61 cents per share (or $2.44 annually) from 57 cents (or $2.28 annually). The amount will be paid on Sep 30, 2021, to shareholders of record as of Sep 1. Shares of the company grew 0.6% in after-hour trading session on Aug 12, post the news release.

With respect to this, Ward Nye, chairman, president and CEO of Martin Marietta, said, “Today’s announced dividend increase extends Martin Marietta’s track record of delivering meaningful and sustainable dividends as part of our longstanding and balanced capital allocation priorities. Our strong cash generation and financial flexibility allow the Company to prudently balance returning capital to shareholders and investing in growth opportunities, as we continue to drive sustainable growth and superior shareholder value.”

Factors Supporting Dividend Hikes

Martin Marietta is a U.S.-based leading supplier of construction aggregates that are used for building highways, infrastructure projects and residential, commercial and industrial building development. The company has been banking on underlying demand fundamentals in public construction activity. Also, it has been expanding its operations and portfolio via regular acquisitions.

The company has been regularly enhancing shareholders’ return through repurchases and dividends. For the first six months of 2021, the company paid $71.8 million through dividend payments and share repurchases and $1.9 billion since it announced a 20-million share repurchase authorization in February 2015. Meanwhile, the company ended second-quarter 2021 with $53.1 million of cash and cash equivalents. Net cash provided by operations was $441.2 million for the first six months of 2021. This reflects the company’s solid liquidity position.

Moreover, during second-quarter 2021 earnings release, Martin Marietta raised its 2021 guideline owing to strong product demand, pricing gains across all product lines and targeted growth initiatives. The company now expects products and services revenues in the range of $4.705-$4.850 billion versus $4.510-$4.700 billion expected earlier. Net earnings are anticipated in the $675-$750 million range versus $665-$750 million expected earlier.

Investors always prefer a return-generating stock. Hence, a high-dividend-yielding one is much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments.

Price Performance

So far this year, shares of the company have gained 36.9% compared with the Building Products - Concrete and Aggregates industry’s 41.4% growth. Meanwhile, earnings estimates for 2021 have moved down over the past 30 days. The overall industry is grappling with higher diesel costs and raw material inflation. Also, adverse weather conditions add to the woes. Despite these challenges, Martin Marietta’s solid 2021 guidance and recent move along with strategic initiatives are encouraging.

Zacks Investment Research
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Zacks Rank

Martin Marietta — which shares space with Vulcan Materials Company (VMC - Free Report) , Summit Materials, Inc. (SUM - Free Report) and Eagle Materials Inc. (EXP - Free Report) in the Zacks Building Products - Concrete and Aggregates industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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