Jan. 29 (Bloomberg) -- Saudi Cement Co. rose to a more than three-year high, leading gains in Saudi Arabia’s stocks, after the kingdom’s largest producer of the building material said it recommends paying a second-half dividend that beat expectations.
The shares rallied 6.5 percent to 78 riyals, the highest level since July 2008, at the 3:30 p.m. close in Riyadh. Southern Province Cement Co., which earlier this month posted a 52 percent gain in fourth-quarter profit, jumped 2.7 percent. The benchmark Tadawul All Share Index climbed 0.3 percent to 6,554.78, the highest since July 11. The cement index rose 2.6 percent, bringing this year’s gains to 2.9 percent.
Saudi Cement’s “dividend announcement came as a positive surprise for investors and put the stock at a very attractive dividend yield,” said Samer Darwiche, a Dubai-based analyst at Gulfmena Investments. “The performance today is a clear indicator of investors’ satisfaction.”
Saudi Cement’s board proposed a second-half dividend of 4.5 riyals a share after paying 2 riyals for the first six months. The company paid a dividend of 4 riyals in 2010, according to data posted on the Saudi bourse website. Fourth-quarter profit rose 40 percent to 212.3 million riyals ($57 million), beating analysts’ estimates.
Saudi Arabia’s cement makers are benefiting from increased government spending in the last two years, including a $384 billion plan for infrastructure and industrial projects in the largest Arab economy. Cement production climbed 13 percent to 48.4 million tons in 2011 from the previous year, according to data posted on the website of Yamamah Saudi Cement Co.
Southern Cement rose to 85.75 riyals. The company on Jan. 17 reported that fourth-quarter profit rose 52 percent to 251 million riyals on higher sales.
“Saudi Arabian cement is expected to show a sustained growth in light of a record spending plan announced by the government,” said Kais Kriaa, an analyst at AlphaMena in Tunis, Tunisia. “The announcement of such a dividend is a good sign for this year.”
To contact the reporter on this story: Mourad Haroutunian in Riyadh at firstname.lastname@example.org