My latest recommendation is designed to capitalize on rising demand for heavy materials and increased construction and infrastructure spending, suggests Mike Larson, growth and income expert and editor of Safe Money Report.
Although Dublin-based CRH plc (CRH) is from the smaller European Union country of Ireland, it is a global player in the materials sector. It employs almost 77,000 people spread across 3,100 locations in 29 countries, and its shares are traded in Dublin, London and on the NYSE as American Depositary Shares.
CRH produces and sells materials like aggregates, concrete and cement used in the construction of everything from bridges to homes, as well as asphalt used in road surfacing.
Meanwhile, the firm’s building products division sells a wide range of outputs. They include pavers and retaining walls for the housing market — architectural glass for commercial buildings — and pipes, anchors, covers and connectors used in infrastructure and utility projects.
Given its product portfolio, CRH will be a key beneficiary of the proposed surge in infrastructure spending — and not just here in the United States. It will also benefit from the booming housing market, which builders will try to profit from by ramping up construction.
Heck, CRH already cited “good underlying demand and continued pricing progress across key markets” in an upbeat April 28 release. It added that first-half earnings before interest, taxes, depreciation and amortization (EBITDA) in 2021 would be “well ahead” of 2020 levels.
Plus, CRH highlighted a “strong pipeline of opportunities” on the mergers and acquisition front. The firm has already spent $200 million on such transactions this year, including a pipe and precast concrete operation in the U.S. that increases its exposure to infrastructure spending here.
What about income? CRH pays a semi-annual dividend that varies depending on firmwide results. The most recent payout footed to 93 cents per share.
All told, its 2020 dividend jumped 25% year over year, pushing CRH’s yield to 2.2%. That’s well ahead of the 1.4% you can get from the SPDR S&P 500 ETF.
