Russel Metals Inc

I own this stock (TSX-RUS). I originally got into this stock because it was on a list of dividend paying growth stocks. I followed an early Canadian financial blogger of Mike Higgs and this was one of the stocks he followed. Mike was always pushing dividend paying growth stocks as the ones we should buy. He influenced my thinking on stocks.

I first bought this stock in 2007. I bought more in 2009 and 2011. To date I have a total return of 5.4% per year. Of that return, 4.3% is attributable to dividends. So my dividend payments are 80% of my return. I expected to do better in the future.

This stock has an interesting dividend record. I have records back to 1990. They had a decreasing dividend from 1990 to 1992 and no dividends from 1993 to 1999. We had a recession in the early 1990 and the company had problems with earnings from 1991 to 1996. The company had increasing dividends from 1999 to 2008. For this stock, the highest dividends were paid in 2008. In 2009 dividends were decreased some 44%. Since 2011 they have again been increasing dividends.

Over the last 5 years dividends have decreased by 6.4% per year. Over the past 10 years, dividends have increased by 19%. This is because dividend increases before 2007 were very good. The increase for 2011 is very good. There were two increases totally a 15% dividend increase. The 5 year median dividend yield is 6.1%, but current yield is a lot lower at 4.4%. One analyst expects a 10% increase in dividends. This increase would move dividend yield to 4.8%.

The 5 year median Dividend Payout Ratios are 60% for EPS and 74% for CF. The 10 year median DPRs are lower at 47% for EPS and 45% for CF. The same figures for 2012 are currently expected to be 62% and 51%. The DPR for 2012 would be higher if dividends are increased in 2012.

Total return over the past 5 and 10 years has been 2% and 32% per year, respectively. The portion of the total return attributable to dividends is 5.4% and 12% per year, respectively. The return for the last 5 years is, of course, all dividends. There was a capital loss of 3.4% per year. For the last 10 years 37.4% of the return has been in dividends.

Mostly, the 10 year growth figures are better than the 5 year growth figures. The growth in revenue per shares is 0% and 2% per year over the past 5 and 10 years. However, growth in the last two years is much better at 10% and 24%. Earnings over the past 5 years are down 12% per year. However, earnings over the past 10 years are up 27% per year. However, analysts expect growth in revenues to be just under 5% for 2012.

Cash Flow per share over the past 5 years has decreased by 3% per year. However, over the past 10 years, cash flow per share is up 9.4% per year. Cash flow was up 49% in 2011, but analysts seem to expect a slight decline for 2012.

Book Value per share over the past 5 years has decrease by 1.7%. Book Value per share has increased by 7.4% per year over the past 10 years. Book Value was up 33% in 2010, but was down by 4.5% in 2011.

Debt Ratios have generally been very good on this stock. The current Liquidity Ratio at 3.41 is great. The 5 year median is also very good at 3.72. The current Debt Ratio at 2.14 is great as is the 5 year median ratio of 2.25. The current Leverage and Debt/Equity Ratios are also very good at 1.95 and 0.51.

The return on equity for the year ending December 2011 was 15%. The 5 year median ROE is 12.9%. The ROE based on comprehensive income was 12.2% at the end of 2011 and was 10.5% as the median value over the past 5 years. The ROE based on comprehensive income is low than the ROE, but it is still good.

This is a rather risky stock as far as dividend payers go. If you have it you have to be prepared for dividend adjustments depending on well the company is doing in the current business cycle. They decrease as well as increase dividends. The company does act prudently as far as dividend payments go. They have very good debt ratios. You would buy this stock for capital gain as well as dividends.

This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors under various names including Russel Metals, A. J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis. Its web site is here Russel Metals. See my spreadsheet at rus.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.