Nucor Corporation (NUE) is North America’s largest and most diversified manufacturer of steel and steel products, with 25 scrap-based steel mills processing up to 27 million tons of steel per year. With 47 consecutive years of dividend increases, the company’s stock is popular among investors seeking a steady source of income.
The company’s diversified product portfolio features sheet (34%), bar (22%), steel products (18%) and raw materials (12%), among other products. These products are sold into construction (36%), service centers (28%) and a diverse mix of other end markets.
On a financial level, the company has one of the highest credit ratings in the industry at Baa1/A1 with $1.4 billion in cash and an undrawn $1.5 billion credit facility maturing in 2023. Management has used this financial flexibility to return a minimum of 40% of earnings to shareholders through dividends, share repurchases and/or supplemental dividends.
Projected Growth Into 2021
Nucor recently projected that its fourth-quarter earnings would be between $1.15 and $1.20 per share, which is higher than consensus estimates of just $1.00 per share, thanks to higher pricing for its sheet and plate mills. The company expects the momentum to continue into the first quarter of 2021 amid tighter supply and improved demand.
The company increased its dividend by 0.6% to $0.405 per share amid the favorable industry dynamics, which represents a 2.96% forward yield. The dividend is payable on February 11, 2021, to shareholders on record as of December 31, 2020.
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