These high yields reflect cyclical pressures

Article Excerpt

Russel Metals and Ford offer investors above average dividend yields. That’s mainly because they operate in cyclical industries with uneven cash flows. Even so, we feel their current dividends are sustainable. RUSSEL METALS INC. $29 (Toronto symbol RUS; Cyclical-Growth Dividend Payer Portfolio, Manufacturing & Industry sector; Shares outstanding: 62.1 million; Market cap: $1.8 billion; Dividend yield: 5.2%; Dividend Sustainability Rating: Above Average; www.russelmetals.com) is one of North America’s largest metal distributors, serving 28,000 clients at 51 locations in Canada and 12 others in the U.S. Oil and gas clients supply about 35% of the company’s revenue. That adds to its cyclical risk. Russel continues to pay quarterly dividends of $0.38 a share; the annual rate of $1.52 yields a high 5.2%. In the three months ended June 30, 2018, the company’s revenue rose 19.8%, to $978.2 million from $816.5 million a year earlier. The increase came from higher shipments and selling prices. Earnings in the quarter were $66.1 million, or $1.07 a share. That’s a 103.5% increase…

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