In the Canadian stock market, strong sustainable dividend yields are usually associated with financial stocks and utilities, not necessarily with industrial stocks that depend more heavily on the overall health of the economy.
Yet today we cover one Canadian industrial stock that raised its dividend payment by almost 10% in September and maintains an attractive yield.
This company is one of North America’s largest metal distributors. It serves its roughly 30,000 customers through a network of 50 locations in Canada and 12 in the U.S.
In the three months ended June 30, 2011, this firm’s earnings per share rose sharply, to $0.43 from $0.14 a year earlier.
Revenue rose at all three divisions: The steel distribution division’s revenue rose 19% due to higher sales volumes and steel prices. Metal services revenue rose 24%, also on higher sales volumes and prices. The energy tubular products division, which supplies pipes for oil and gas companies, saw its revenue rise 19% on higher drilling activity.
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Canadian stock market: Oil and gas drilling accounts for 30% or revenue
This company raised its quarterly dividend by 9.1% with the September 2011 payment, to $0.30 from $0.275. The stock now yields 5.4%. Further increases are likely. The company holds cash of $223.9 million, or $3.34 share. Its $302.0 million of long-term debt is a reasonable 20.1% of its market cap.
The company continues to prosper. But it does face challenges. Customers in the oil and gas drilling industry account for about 30% of the firm’s revenue. That, plus its exposure to fluctuating steel prices, adds risk. Meanwhile, the company plans to keep selectively buying competing firms. That also adds risk.
In the latest edition of Stock Pickers Digest, we reveal this industrial stock’s identity and assess its long-term outlook in light of those risks. We conclude with our clear buy-hold-sell advice.
If you’re looking for stocks with the potential for gains of 50% or more in 6 months or less, you should subscribe to Stock Pickers Digest.
The latest issue of Stock Pickers Digest gives you our full analysis, including clear buy/sell/hold advice, on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. What’s more, you can save $50.00 off regular annual subscription rate. Click here to learn how.
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Cecil
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I spend much time reading”come-ons” I read an article that has an interesting title BUT is only a “come-on” to buy another of your publications ! Bah! Humbug ! If you introduce a subject Do give us an answer NOT ” buy another to find out. My time is my most valuable resource.
Cecil,
If you want to be spared our “come-on” advertising (or advertising for our other products and services, as we prefer to refer to it!), that’s easy to do. We put virtually all our ads on the free portion of TSINetwork.ca, which is open to non-subcribers and the public in general. The areas where you’ll find paid material are virtually ad-free. Confine your browsing of TSINetwork.ca to the newsletters you’ve paid for and you’ll rarely see an ad.
Pat McKeough