What’s something that Democrats and Republicans can demonstrably agree on? If you thought ‘nothing’ then you thought wrong because there is at least one thing in America that brings us together: our hatred of traffic gridlocks and potholes.
Infrastructure is something that the U.S. has always invested in, and by the looks of it, it seems that President Biden is ready to tackle this issue, now that the administration finished working on the COVID relief bill.
But why should you care? Because you should start investing in infrastructure stocks. When it comes to investments, most of them come from the private sector. But infrastructure in the form of bridges and roads, for example, is usually funded by the government.
This is why now’s a good time to start reading up on infrastructure stocks. Get familiarized with them and decide where to put your money so that you can diversify your portfolio and reap the sweet, sweet benefits when you retire.
We’ve come up with a list of 12 stocks that are likely to see a spending surge from Washington and we think you should join in on the bandwagon! And it’s not just us that thinks so. Wall Street fully expects the administration to start spending more on infrastructure, so why shouldn’t you join in on the fun of making money alongside them?
Vulcan Materials
With a market value of $22.3 billion and a dividend yield of 0.9%, now’s the perfect time to invest in Vulcan Materials, the country’s biggest producer of construction aggregates. After all, we’re expecting to see a lot of roads paved in the upcoming years, so investing in a company that produces gravel, sand, crushed stone, cement and asphalt is a no brainer.
Who buys from Vulcan Materials? Government spenders, primarily in order to focus on building infrastructure and highways, as well as private-sector buyers for residential and nonresidential building construction.
76% of the company’s revenue comes from Aggregates. They also make up 91% of it’s gross profit. So for the sake of the argument, let’s say that the government is not ready to buy from them. They’re still expecting a spike in sales and years of above-trend growth.
What’s more, Biden has always been for ‘buying American’, which is another reason why the administration could buy from Vulcan Materials.
Martin Marietta Materials
Similarly to Vulcan Materials, experts expect the government to start buying from Martin Marietta Materials, a company with a market value of $21 billion and a dividend yield of 0.7%.
They also specialize in materials used in large construction and infrastructure projects by making crushed gravel and sand products, paving products (as well as services), and ready-mixed concrete and asphalt.
Not only that, but they produce dolomitic lime for the mining and steel industries and magnesia-based chemical products for environmental, agricultural, and industrial applications.
Basically, with Martin Marietta Materials you’ll get the two in one benefit of investing in a company with infrastructure ties (in the form of materials for roads and bridges) as well as chemical ties, as their products are also used in wastewater treatment, flame retardants, and assorted environmental applications.
This is a huge plus knowing that the Biden administration is hoping to help America become greener.
Now, skeptics will point out the fact that Martin Marietta Materials has seen ups and downs over the past couple of years. But things finally took a turn for the better in 2020, with experts predicting that this trend will continue due to Biden’s long-waited infrastructure bill.
Vale
Since America is projected to see a large building boom, then putting your money into Vale, a Brazilian company with a market value of $87.6 billion and a dividend yield of 7% is a good idea. It’s the world’s leading in nickel mining and one of the leading companies for iron ore mining (in a race with Rio Tinto and BHP group).
Additionally, Vale is also a huge producer of copper, silver, and gold.
Since it’s projected that Biden is going to look towards sustainability, it makes sense that his administration would focus on Vale, as 80% of the company’s electricity usage is renewable in the form of wind and solar farms.
On the other hand, the company has seen a pretty rough decade. It even lost 95% of its value. But careful observers will have noticed that their shares have actually been trending higher since 2016. What this means is that the company has plenty of room to run and grow.
Nucor
Nucor is a favorable company to invest in right now, primarily because they have helped provide the U.S. with steel for many of our most prominent structures such as dams, waterways, bridges, airports, and more, in addition to providing steel for guard rails, signposts, grating, pipe piling, sheet piling, etc.
With a market value of $20.6 billion. Nucor is actually the largest domestic steelmaker in North America. This also gives the company an advantage over foreign competitors such as Nippon Steel and ArcelorMittal. Their dividend yield? 2.4%.
Here’s another reason you should focus on Nucor. In February, the company announced that they expected their first-quarter earnings to set a new company record. Later on, they even said that their second quarter will be even better.
Keep in mind, this is even without the expected post from governmental spending. So by combining the two, Nucor is definitely looking at a favorable outcome- as should you!
Caterpillar
If you’ve ever laid eyes on mining or construction equipment, it was likely made by Caterpillar, a company with a market value of $124.1 billion, with a dividend yield of 1.8%. Even if you traveled across the globe there’s a high chance that you’d spot one of their iconic yellow tricks in a nearby construction site.
From compactors to excavators, asphalt pavers, backhoes, pipelayers, and more, this company helps provide any construction site with the right equipment for a job well done.
Here’s the thing- infrastructure spending is a huge component in any economic recovery plan. That’s why investors have set their sights on Caterpillar as of late, despite not paying the company all that much attention before.
The Biden administration, if it plans on relying on infrastructure to help recover our economy, will definitely need the tools to do so.
So, despite the company’s relatively poor performance in the past, there’s a good chance that things will take a major turn going forward.
Deere
One thing’s for sure: there will never be a time in which America will not need heavy-duty farming equipment such as tractors. Deere, a company with a market value of $117.1 billion and a dividend yield of 1% is known for their farming equipment, but also for equipment used in forestry, roadbuilding, and earthmoving.
In 2020 alone they sold $22.8 billion in farming equipment and $9.2 billion in forestry equipment. Keep this in mind, especially now that the industry sector is likely to see a boost, as the government’s spending coupled with the company’s already successful business in the agricultural sector could translate into a huge win for investors.
From multiple angles, it looks like there are plenty of reasons to trust Deere with your money going forward.
United Rentals
If there will be an abundance of construction going on in the upcoming years, then there’s no doubt that there will be a huge increase in the need for construction equipment. You’re thinking what we’re thinking? It’s time to invest in this particular sector- namely, in United Rentals, a company with a market value of $22.5 billion.
Out of the company’s 1,165 rental locations, 1,081 are in the United States.
The Tech, Power, and Fluid Solutions segment of the company rents out equipment designed for underground word and, of course, fluid treatment while the General Rentals rents out anything that you’d typically see on a construction site. Here we’re talking about the bread and butter of this industry: earthmoving equipment, forklifts, backhoes, boom lifts, and more.
The company’s shares have doubled since July and if Wall Street is paying attention, so should you!
Freeport-McMoRan
Freeport-McMoRan, one of the world’s largest copper miners, should be seeing a lot of attention in the near future. With a market value of %50.7 billion, experts say that investing in this company now could make your future brighter. That’s because 43% of all mined copper is used in building construction, with an additional 20% used in transportation equipment.
An infrastructure boom will undoubtedly cause a boom in copper sales, which is widely used in plumbing and electrical wiring.
But that’s not the only reason you should invest in Freeport-McMoRan! So, by now we all know that Biden plans to heavily invest in green energy. Did you know that compared to traditional internal combustion vehicles, electric vehicles use four times more copper?
Not only that, but it’s a central component in wind and solar energy as well. In fact, renewable energy uses four times more copper than oil and gas.
There’s no reason to be on the fence when it comes to Freeport-McMoRan.
Brookfield Infrastructure Corporation
Brookfield Infrastructure Corporation is a company with a market value of $3.3 billion, with a dividend yield of 2.8%. But did you know that it’s actually one of the biggest diversified infrastructure stocks in the world? Their operations span transportation, energy, data, and utility infrastructure.
Their transportation segment moves bulk freight commodities across a network of 10,300 kilometers of railroads, 37 port terminals, and 4,200 kilometers of toll roads, while their utility segment operates 2,000 kilometers of electrical transmission line and 2,000 kilometers of natural gas pipeline.
In terms of their energy segment, they operate around 16,500 kilometers of pipelines.
Because their operations are global, you’ll still get a good bang for your buck, even AFTER America’s upcoming infrastructure boom.
Furthermore, they’re known as shareholder-friendly. They boast an annual dividend growth of 5% to 9% while they also target a long-term return on equity of 12% to 15%.
Eaton
This one is for those who would rather aim for a broad play. Eaton is the company for you, with a market value of $53.6 billion and a dividend yield of 2.2%. But here’s why we’re calling it a ‘broad play’ in the first place.
President Biden and his administration are planning on relying on more sustainable infrastructure, according to the Build Back Better campaign. Eaton is a major supplier of electrical components and systems. They focus on wind and solar farms, which have to be integrated into the national grid. So betting your money on Eaton is a no-brainer.
Plus, what’s better than a power management company that looks to the future while being backed up by a long history of being in business. In fact, they’ve been at it for over a century. The company has also been paying dividends every year since 1923.
Considering the massive changes power management has seen over the years, this is downright impressive!
Crown Castle International
We’ve heard it from President Biden time and time again. He wants modern infrastructure! Specifically, his administration aims to provide universal broadband coverage. We don’t think we need to remind you of how crucial it is seeing as millions of people had to work from home with a reliable internet connection due to COVID-19.
Now, what the U.S. needs is not to be covered head to toe in new cables. Instead, we’re relying more and more on cell towers, with the emergence of 5G at the forefront of the movement. To put it simply, we need more wireless towers and the government knows this.
That’s exactly why investing in Crown Castle International, a company with a market value of $69.9 billion and dividend yields of 3.2%, is crucial. They’re America’s leading wireless tower real estate investment trusts, owning more than 80,000 route miles of fiber that support around 80,000 small cells, in addition to 40,000 cell towers.
If you’re unconvinced, consider this: mobile data usage is not slowing down any time soon. Instead, it’s growing at an unimaginable rate. So let’s assume that the company will not see any infrastructure spending bill money.
OK, nevermind then! That doesn’t mean they won’t continue to grow and make you money, as clearly what they’re offering is in hot demand.
Global X U.S. Infrastructure Development ETF
Finally on our list is Global X U.S. Infrastructure Development ETF. Their assets under management? $2.0 billion. Expenses? 0.47%, or $47 annually on every $10,000 invested. And let us not forget dividend yields which sit at 0.4%.
This one should be an easy choice for those who would rather go for a “one-stop shop”. This ETF holds around 100 infrastructure stocks, so you can’t go wrong with this choice, especially if you want to invest in what the government is planning on investing in in the near future: clean energy and raw materials for construction.
65% is invested in industrial companies, while another 21% is invested in materials- both of these are said to see massive increases in sales in the near future. If that’s not enough, you should also note that Global X U.S. Infrastructure Development ETF also invests in utilities, financials, and information technology.
Takeaways
To put it simply, setting money aside is no longer the only way towards a secure financial future. If yo want your retirement years to truly shine, then it’s time to start investing if you haven’t already.
And here’s the thing about investing. You have to look at trends. Take a page out of Wall Street’s books and keep a close eye on what the government is doing to give you an idea of where to invest while also keeping your options open. After all, a diversified portfolio is the best way to ensure your financial safety.
We hope that today we’ve managed to cover everything you need to know about some of these companies and why you should invest in them.
Commend down below with your own thoughts. What do you think the future will hold? What do you think about Biden’s potential plans for infrastructure? We can’t wait to hear your opinions!
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