After the Storms: Two Rebuilding Plays

10/12/2017 5:00 am EST


Harry Domash

Publisher, DividendDetective and Winning Investing

Most of the properties damaged by the hurricanes will probably be rebuilt over the next two or three years. In our view, stock analysts are underestimating the resulting benefits to construction industry players, asserts Harry Domash, editor of Dividend Detective.

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Consequently, we’re adding two new picks to our Manufacturing & Services portfolio that are likely to report better than expected revenue and earnings numbers over the next 12 to 24 months.

One makes parts required to build almost all buildings, whether residential and commercial. The other is a favorite source for do it yourselfers and remodeling contractors. Further, both love paying dividends.

Simpson Manufacturing (SSD) is a global supplier of screws and fasteners required to connect building components in almost all construction projects, both residential and commercial.


Analysts were already forecasting around 9% revenue and earnings growth in 2018 and we’re betting that Simpson soundly beats those forecasts.

Simpson’s dividend yield is only 1.7% but it raised its payout 17% this year and 13% last year, so we can expect even stronger dividend growth if its business strengthens as we expect.

Home improvement supplies retailer Home Depot (HD), with more than 2,200 stores needs no introduction. Prior to the hurricanes, analysts were predicting mid-single-digit annual EPS and revenue growth. But, they haven’t significantly raised forecasts since the storms hit.

Home Depot is a dividend believer. It raised its payouts by 26% in 2015, 17% last year, and by 29% in March. Its current yield is 2.2%.

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