Today, Vulcan Materials (VMC) said it is cutting its quarterly dividend to 1 cent and has also replaced a revolving credit facility, set to expire next November, with a smaller $500 million one.
The stock currently pays out 25 cents a share, for a 3.2% yield; the move will put roughly $124 million per year back into Vulcan’s pockets.
SunTrust Robinson Humphrey, SunTrust Bank (STI), and Wells Fargo (WFC) will underwrite the new 5-year credit facility.
“Although the announcements were made separately, we think it’s a good move for Vulcan to cut its dividend, since the smaller credit facility will provide the company with less flexibility than the previous one during the downturn,” writes Morningstar analyst Elizabeth Collins in a note this morning. “While the dividend cut is disappointing for income-driven shareholders, we think the improvement in financial health is good for patient long-term investors who are looking for share price appreciation once construction activity picks up.”
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