This High-Yield Construction Stock Just Raised Its Dividend by 40%
Glass jar with the word Dividend by Andrii Yalanskyi via Shutterstock AI data centers need a huge amount of electricity. As hyperscalers add more capacity, the bigger bottleneck may be finding enough power, not chips. Berkshire Hathaway (BRK.A) (BRK.B) sees electricity as a growing opportunity tied to that demand. That is good news for companies…
Glass jar with the word Dividend by Andrii Yalanskyi via Shutterstock
AI data centers need a huge amount of electricity. As hyperscalers add more capacity, the bigger bottleneck may be finding enough power, not chips. Berkshire Hathaway (BRK.A) (BRK.B) sees electricity as a growing opportunity tied to that demand.
That is good news for companies that build power plants. Argan (AGX) provides construction and related services for power plants and energy infrastructure. In its latest fiscal quarter, Argan reported net income of $53.3 million, or $3.76 per share. The prior quarter brought a record revenue of $291 million and left the company with about $2.8 billion in project backlog.
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Argan has now backed that performance with a 40% dividend increase. Its quarterly payout rose from $0.50 to $0.70 per share, or $2.80 annually. It is the company’s fourth straight annual dividend increase, following a 33% raise in September 2025. So, what is supporting the bigger payout, and can Argan, Inc. keep it going? Let’s find out.
The Numbers Behind the Dividend
Argan is a specialty construction company whose core business centers on engineering, procurement, and construction work for power-generation, industrial, and telecommunications projects. Its share price has reflected that exposure, gaining 70% over the past 52 weeks and 25% year-to-date (YTD).
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That rally has made the stock pricier. AGX stock trades at a forward P/E of 32.73x, above the sector average of 19.59x. Investors are paying more for the company’s expected earnings growth.
Even so, the dividend still looks well covered. Argan raised its quarterly dividend by 40% to $0.70 per share from $0.50. The dividend will be paid on Oct. 30 to shareholders of record on Oct. 22. At the new rate, the company will pay $2.80 per share each year. This is its fourth straight annual dividend increase. Before the latest raise, its forward payout ratio was only 15.57%, leaving cash available for project work, stock buybacks, and further dividend increases. Argan pays its dividend quarterly, and its yield is above the 2.36% average for industrial stocks.
The increase came after a record fiscal 2027 second quarter. Revenue rose 61.5% from a year earlier to $384.0 million, while gross profit increased 67.7% to $74.2 million. Gross margin improved 70 basis points to 19.3%. Net income climbed 51.1% to $53.3 million, or $3.76 per diluted share. Adjusted EBITDA jumped 81.9% to $70.0 million, and EBITDA margin rose 200 basis points to 18.2%.
A Larger Pipeline Beyond Power Construction
Argan is expanding beyond power construction through its Teledata business. Its Southern Maryland Cable subsidiary bought Connecticut-based ValCor Communications on July 31 for about $8.3 million, paid for with a mix of cash and AGX stock. ValCor installs, maintains, and repairs information, communications, and data networks across New England. The acquisition gives Argan more reach in the region and adds long-standing customers in the defense, aerospace, and technology sectors, including Fortune 500 technology companies.
Power construction, however, remains the company’s main source of growth. During the fiscal second quarter, Argan finished its third and final Midwest Solar and Battery project ahead of schedule and completed the 950-megawatt Trumbull Energy Center in Ohio. It still has eight power projects underway, including six thermal projects and two renewable projects.
These include 1.2-gigawatt and 1.4-gigawatt combined-cycle plants in Texas, an 860-megawatt Texas project, a 700-megawatt U.S. combined-cycle plant, and two projects in Ireland. About 79% of its backlog comes from natural-gas projects, while renewables account for 13% and industrial work comprises the remaining 8%.
Argan also expanded its share-repurchase authorization from $150 million to $200 million and extended it through Jan. 31, 2030, giving management another channel to return excess capital alongside the higher dividend.
Analysts See More Room to Run
Argan, Inc. is expected to report earnings again on Dec. 3. Analysts expect the company to earn $3.37 per share for the current October 2026 quarter, up 55.30% from $2.17 a year earlier. For the fiscal year ending January 2027, the consensus estimate is $13.56 per share, up 39.22% from $9.74 in the prior year.
On Sept. 3, Lake Street Capital analyst Robert Brown raised his rating on AGX stock to “Buy” from “Hold” after the company’s record fiscal second-quarter results. He set a $600 price target, which represented about 46% upside from the stock’s closing price at the time. Brown believes Argan is still in the early stages of a growth run as demand for new power capacity rises.
JPMorgan’s Michael Fairbanks had earlier upgraded AGX to “Overweight” from “Neutral” and set a $550 price target. He cited earnings that came in well above expectations, helped by the early completion of the Trumbull Energy Center and progress on solar and battery-storage projects.
Overall, all nine analysts covering AGX stock rate it a consensus “Moderate Buy.” Their average $553.86 target suggests 41% upside from current price levels.
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Conclusion
Argan’s 40% dividend increase looks supported by more than just a strong quarter. Record earnings, expanding margins, a power-heavy project backlog, and a modest payout ratio give the company room to fund its higher distribution while continuing to invest in new opportunities. The main risk is that AGX already commands a premium valuation after a sharp rally, so project timing and execution will matter. Still, with demand for new power capacity remaining firm and analysts forecasting substantial earnings growth, the shares appear more likely to trend higher over time, though investors should expect volatility along the way.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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