Russel Metals Offers a 4.1% Yield Backed by Low Valuation and Strong Growth Prospects

Russel Metals Inc. offers you a high 4.1% yield as it successfully integrates its latest acquisitions.

Russel Metals continues to expand with smart and complementary acquisitions. Meanwhile, its prospects are backed by a diversified and stable business model across metals service centers, energy field stores, and steel distribution. We also like Russel’s value-added processing capabilities and strategic geographic positioning.

Meanwhile, the stock trades at a very reasonable 11.4 times the company’s forward earnings forecast.

RUSSEL METALS INC. (Toronto symbol RUS; www.russelmetals.com) is one of North America’s largest metal distribution companies, with a growing focus on value-added processing.

The company carries on business in three segments: metals service centres, energy field stores and steel distributors. Its network of metals service centres carries an extensive line of metal products in a wide range of sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel, aluminum and other non-ferrous specialty metals. Its energy field stores carry a specialized product line focused on the needs of energy industry customers. Its steel distributors act as master distributors selling steel in large volumes to other steel service centres and large equipment manufacturers mainly on an “as is” basis.

Russel continues to expand with savvy acquisitions

In August 2024, the company completed the acquisition of seven service-centre locations from Samuel, Son & Co. for $225 million,

Russel acquired Samuel’s metals service centres in Winnipeg, Calgary, Nisku (Alberta), Langley (BC), Surrey, Buffalo (New York) and Pittsburgh. Samuel retained its location in Delta (B.C.) and has conducted an orderly shut-down of that facility.
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In Western Canada, Samuel’s five locations are a strong fit with Russel’s current footprint, including providing new opportunities to benefit from Samuel’s focus on non-ferrous products and Russel’s focus on value-added processing. In the U.S. Northeast, the two locations provide an eastern extension of Russel’s existing operations in the U.S. Midwest.

Meanwhile, in December 2024, Russel completed the acquisition of Tampa Bay Steel Corporation for $79.5 million U.S. That firm operates in the central Florida region, and its business includes significant value-added processing and non-ferrous products. Tampa Bay Steel has annual revenue of about $115 million U.S.

The long-term outlook for Russel is positive, and the stock trades at just 11.4 times the 2025 forecast earnings of $3.70 a share. With the June 2025 payment, the company raised your quarterly dividend by 2.4%, to $0.43 a share from $0.42. The new annual rate of $1.72 yields an attractive 4.1%.

Recommendation in Power Growth Investor: Russel Metals Inc. is a buy.

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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