The basic materials sector is highly cyclical. It relies on a strong economy to create demand for its raw materials. Since most of its products are considered to be commodities, the sector is sensitive to supply and demand fluctuations with end-users able to substitute based on price.
Historically, yields in this sector have been on the lower end of the scale. However, with the increased demand for certain raw materials, the stocks in this sector are beginning to see higher yields with increased profitability. In addition, depressed prices on some companies have also boosted yields.
This week week, I screened my dividend growth stocks database for basic materials companies with a yield above 3.0% and that have increased their dividends for at least 20 consecutive years. The results are presented below:
PPG Industries Inc. (PPG)
Yield: 3.2% | Years of Dividend Growth: 38
PPG is a leading manufacturer of coatings and resins, flat and fiber glass, and industrial and specialty chemicals.
MDU Resources Group Inc. (MDU)
Yield: 3.4% | Years of Dividend Growth: 21
MDU Resources Group Inc. is involved in electric and natural gas distribution, natural gas storage, gathering and transmission, construction materials and mining, and oil and natural gas production.
Sonoco Products Co. (SON)
Yield: 4.1% | Years of Dividend Growth: 28
Sonoco Products Co. makes paper and plastic packaging products serving various industries and markets in more than 85 countries.
Harsco Corporation (HSC)
Yield: 4.2% | Years of Dividend Growth: 21
Harsco Corp. is a global industrial service provider and manufacturer that has operations in steel mill services and access services, as well as construction.
RPM International Inc. (RPM)
Yield: 4.5% | Years of Dividend Growth: 39
RPM International Inc. makes specialty coatings and products for the structural waterproofing and corrosion control markets, as well as products for the consumer, do-it-yourself, and hobby markets.
Nucor Corporation (NUE)
Yield: 4.6% | Years of Dividend Growth: 38
Nucor Corporation is the largest minimill steelmaker in the U.S., and has one of the most diverse product lines of any steelmaker in the Americas.
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. Some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long NUE. See a list of all my dividend growth holdings here.
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