Vulcan Materials' (NYSE:VMC) Dividend Will Be Increased To $0.43

Vulcan Materials Company's (NYSE:VMC) periodic dividend will be increasing on the 20th of March to $0.43, with investors receiving 7.5% more than last year's $0.40. Based on this payment, the dividend yield for the company will be 0.9%, which is fairly typical for the industry.

Check out our latest analysis for Vulcan Materials

Vulcan Materials' Earnings Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, Vulcan Materials' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 4.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 38%, which is in the range that makes us comfortable with the sustainability of the dividend.

Vulcan Materials Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.04, compared to the most recent full-year payment of $1.60. This implies that the company grew its distributions at a yearly rate of about 45% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Vulcan Materials hasn't seen much change in its earnings per share over the last five years. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

We Really Like Vulcan Materials' Dividend

Overall, a dividend increase is always good, and we think that Vulcan Materials is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 3 warning signs for Vulcan Materials that investors should know about before committing capital to this stock. Is Vulcan Materials not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.