13 Best Infrastructure Stocks for America's Big Building Spend

13 Best Infrastructure Stocks for America’s Big Building Spend

One of President Joe Biden’s highest priorities will finally become reality: a massive infrastructure deal that will usher in more than a trillion dollars in new spending across eight years to improve the nation’s roads, bridges, rail, internet, water systems and more.

A quick reminder: Biden’s original $2.25 trillion infrastructure proposal would have been the biggest public works program in decades. In the president’s own words, it would be “unlike anything we have seen or done since we built the interstate highway system and the space race.” But large portions of the proposed bill faced significant hurdles in Congress. For example, there were sections that addressed improvements to the home healthcare system and called for the creation of jobs at “prevailing wages in safe and healthy workspaces” that critics said had little to do with what we might normally consider infrastructure.

That said, infrastructure spending is generally popular with voters. Hatred of potholes and gridlock seems to be one of the few areas of agreement between Republicans and Democrats.

“Maintaining America’s place as the world’s premier economy isn’t something that just happens,” says Chase Robertson of Houston-based RIA Robertson Wealth Management. “It requires investment. Most of that investment comes from the private sector, but certain things – particularly roads, bridges and shared infrastructure – tends to be funded by the government. And the new administration has made it very clear that this is a major priority.”

The new infrastructure bill, which was passed by the Senate in August and got through the House last night, boasts a $1.2 trillion price tag that includes $550 billion in new spending that should be a boon to traditional infrastructure stocks. Biden is expected to sign the bill into law soon.

Today, we’re going to look at 13 of the best infrastructure stocks that should benefit from a spending surge from Washington. This includes many names you’d typically associate with traditional infrastructure, as well as several unorthodox picks that a bill could bolster nonetheless.

Data is as of Nov. 5. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Vulcan Materials

Market value: $26.0 billion

Dividend yield: 0.8%

If you expect to see a lot of roads paved or repaired in the coming years, then it makes sense to own Vulcan Materials ( VMC , $196.06). It’s America’s largest producer of construction aggregates, which includes things like crushed stone, sand and gravel. It’s also a major producer of asphalt and cement. Aggregates make up 76% of the company’s revenues and 91% of its gross profit.

Sign up for Kiplinger’s FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Vulcan’s sales mix is spread roughly evenly between private-sector buyers (primarily residential and nonresidential building construction) and government buyers (primarily highways and building infrastructure). Even without a major spending bill, an expected increase in new home construction would likely be enough to give Vulcan’s top line a meaningful boost. But with Uncle Sam looking to open his checkbook, Vulcan is likely looking at years of above-trend growth.

The Biden administration has shown a preference for “buying American,” and this should suit infrastructure stocks such as Birmingham, Alabama-based Vulcan Materials just fine. It’s as American as apple pie, with more than 360 aggregates facilities scattered across the country. The company has been in business for 64 years and is considered the leader in the industry.

VMC is an obvious beneficiary of the new infrastructure bill. Martin Marietta Materials

Market value: $25.7 billion

Dividend yield: 0.6%

Up next is Martin Marietta Materials ( MLM , $412.32).

MLM could be among the best infrastructure stocks over the coming months or longer because the story here is very similar to Vulcan Materials. Martin Marietta is a building materials company that specializes in the inputs used in large construction and infrastructure projects. Among other things, it makes crushed sand and gravel products, ready-mixed concrete and asphalt, and paving products and services.

Additionally, Marin Marietta makes magnesia-based chemical products for industrial, agricultural and environmental applications, and produces dolomitic lime for the steel and mining industries.Apart from the infrastructure implications – you need cement and asphalt for roads and bridges – Martin Marietta’s chemical products are used in flame retardants, wastewater treatment and assorted environmental applications.Martin Marietta was heavily up and down over much of the past five years. But in the second half of 2020, the stock finally started to build a trend and broke out of its range. It’s now up 45% year-to-date in 2021, and […]

source 13 Best Infrastructure Stocks for America’s Big Building Spend

Leave a Reply