If you are thinking about adding a commodity stock to your portfolio, there is a metals company worth your consideration: Russel Metals Inc. (TSX:RUS).
Russel Metals is one of North America’s largest metal distributors and processors. According to its website, it works in three main segments: metals service centres, energy products, and steel distributors. This company has a long history, as it was first operated as John Russel & Co. back in 1784.
Russel Metals by the numbers
Russel released second-quarter results in August and reported earnings per share of $0.53, beating analyst estimates of $0.38 per share. This dwarfed last year’s second-quarter results by 96.30%.
To explain this rather astounding growth, Russel stated: “All of our business segments experienced stronger operating results than the comparable second quarter of 2016 driven by higher selling prices in all of our segments and higher volumes in energy products and steel distributors.”
Russel has a net profit margin of 3.46%. This may seem thin, but it’s among the best in the industry. For comparison, industry peer Adf Group, Inc. (TSX:DRX) has a net profit margin of 1.70%.
Russel has a return-on-equity (ROE) ratio of 12.38%. This is lower than the 15-20% analysts generally like to see, but again, this is among the industry-leading ROE numbers.
The company has a current debt-to-net-equity ratio of 1.03, so Russel carries slightly more debt than equity at the moment.
A quality dividend
One place this stock really shines is with its dividend offering. The company currently offers a quarterly dividend of $0.38 per share for an annual payout rate of $1.52 per share. This gives the dividend a hefty yield of 5.46%. This has been a consistent dividend payout, rising slightly from its offering of $0.35 per share in 2014.
Bottom line
Russel has a long history and a string of healthy numbers. If you are an income investor, the dividend payout would be a nice addition to your quarterly income. If you’d like to add a metals company to your Foolish portfolio, Russel Metals would be a good choice.
