Dividend Stock Analysis: Russel Metals Inc. (TSE: RUS)
About the company:
Here is Russel Metals description of what they do, which can be found on their website here
Russel Metals conducts its distribution business primarily in three segments: metals service centers; energy tubular products; and steel distributors. The company is one of the few metals distribution companies in the world to operate a significant international trading operation in conjunction with service centers."
What the professionals think:
| Source | Value | Score |
|---|---|---|
| Is it a Dividend Aristocrat: | No | 0 |
| Is it a Dividend Achiever : | Yes | 0.5 |
| Globe Investor Rating: | 5 | 0.5 |
Score: 1.0/1.5
Dividend performance:
Dividend Information acquired at DividendInvenstors.ca
| Measurement | Value | Measurement | Value |
|---|---|---|---|
| Dividend Rate: | $1.80 | Quarterly Dividend Rate: | $0.45 |
| Current Dividend Yield: | 5.90% | 5 yr. Avg. Dividend Yield: | 4.70% |
| 3 yr. Dividend Growth: | 53.35% | 5 yr. Dividend Growth: | 57.00% |
| # years of dividend growth: | > 5 | # years paying dividends: | 8 |
| Payout Ratio: | 100.00% | 5 yr. Historic Payout Ratio: | 57.00% |
| Measurement | Value | Score |
|---|---|---|
| Is current Yield > Avg Yield: | Yes | 1 |
| > 10% dividend growth per year: | Yes | 1 |
| > 5 yrs of dividend growth: | Yes | 1 |
| payout ratio <= historic payout ratio: | No | 0 |
Score: 3.0/4.0
Fundamentals:
All fundamentals based on 2007 annual report, and the latest market close price of $30.54
| Measurement | Value | Score |
|---|---|---|
| Earnings per share (EPS): | $1.77 | - |
| Is EPS consistently growing: | No | 0 |
| Net Profit Margin: | 4.35% | - |
| Is Net Profit Margin growing: | No | 0 |
| Price/Book Ratio (P/B) < 0.66: | 2.18 | 0 |
| Price/Earnings Ratio (P/E) < 15: | 17.25 | 0 |
| Price/Sales Ratio (P/S) < 1.5: | 0.75 | 0.5 |
| Return On Equity (ROE) > 20%: | 12.67% | 0 |
| Debt to Equity: | 20% | - |
| Debt/Equity to Industry <= 100%: | Yes | 0.5 |
Score: 1.0/3.5
Technicals:
Chart Acquired at StockCharts.com
| Measurement | Value | Score |
|---|---|---|
| 200 day Simple Moving Average direction: | Flat | 0.25 |
| Indicators show a good time to buy (MACD, SSTOCH, RSI): | No | 0 |
Score: 0.25/1.0
Total Score: 5.25/10
Notes:
- Russel Metals Inc. has had strong growth over the last 4 months, enjoying roughly a 66% increase in its share price. This has brought the price back up into 'overbought' territory again, so if you are interested in getting some shares, you might want to watch the technicals until they show a more favorable time to buy.
- It has been noted by other dividend based investors that the dividend might be in jeopardy, although this is just rumors and speculation, it is still something to note due to the high payout ratio.
Summary:
Even though Russel metals has done really well for me recently, looking at its score here was a bit of an eye opener. Russel Metals Inc. sports a hefty yield of 5.90%, but don't let this fool you, the payout ratio is a clear warning sign that the current dividend rate might be in jeopardy. A final score of 5.25 is too low for my liking. I am personally going to be holding on to the shares that I do own, but I am not going to be adding to my position any time soon.
Recommendation: Don't Buy
Full Disclosure: I currently own shares in Russel Metals Inc. (TSE: RUS)
Disclaimer: Any information contained in the above article represents my opinions only, and should not be construed as personalized investment advice. I cannot assess, verify or guarantee the suitability of any particular investment to any particular situation and the reader of the article bears complete responsibility for its own investment research and should seek the advice of a qualified investment professional that provides individualized advice prior to making any investment decisions. All opinions expressed and information and data provided therein are subject to change without notice.
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