Source: https://www.nucor.com
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When it comes to steel production, no name in America is as well-known as the Charlotte, North Carolina steel company, Nucor Corporation (NYSE: NUE).
The largest steel producer in North America, a consistent dividend growth stock and is currently a Dividend Aristocrat, the company has increased its annual dividend for 48 consecutive years. And Nucor Corp is a few years shy of receiving the unique title of becoming a Dividend King.
And if there was one company I knew immediately that I wanted to invest in for the Materials Sector, it was going to be Nucor Corp.
Nucor’s origins goes as far back when auto manufacturer Ransom E. Olds, founder of Olds Motor Vehicle Company (1897, would later become known as Oldsmobile, part of General Motors Corporation), would leave the company and establish REO Motor Car company in Lansing Michigan.
Unfortunately, the company wasn’t profitable and they filed bankruptcy in 1938. But when activist shareholders challenged the company’s liquidation, REO was forced to take over a tiny nuclear services company called Nuclear Consultants, Inc. in a reverse takeover.
The company would then become known as Nuclear Corporation of America, Inc. and while nuclear services was unsuccesful, the company would acquire Vulcraft corporation, a steel joist manufacturer.
The company would go through reorganization in the ’60s and for short, would be called Nucor, and their only profitable business was through their steel fabricating company, Vulcraft.
But due to steel prices, Nucor got into steelmaking by building its first steel bar mill in Darlington, South Carolina.
By 1972, the Nuclear Corporation of America, Inc. adopted the name, Nucor Corporation and would produce low cost commodity steel products and soon became the leader in recycling technology.
The company would go on to make numerous acquisitions of steel company from the early 2000s to the present, with their most recent acquisition in June 2021 of the insulated metal panel business from Cornerstone Building Products.
While the company has dealt with some expensive dings to their environmental record.
Nucor Corp’s direction has now been to be the safest company in the world, building partnerships, having a high quality productive team, financial strength and commitment to the environment and local communities.
Nucor Corp is raising the bar for steel mills and other recyclers. The company is built on the sustainable model of recycling steel in massive volumes, and to continue to push recycled content into steel products where it was never considered viable. Also, for them to be committed to perfecting new technologies that reduce emissions and increase energy efficiency. In addition, finding ways to recycle water more efficiently, detect radiation in scrap and get more value from everything they do.
Looking at their chart since 1980, the company has no doubt grown. Hitting its peak in 2007 but then dropping during the market crash of 2008. Maintaining over $50 for another 16 years but being strong during the pandemic and eventually reaching its highest price at over a $100.
Currently, NUE is $95.68 (as of June 22nd’s close), having a market cap of $28.7 billion and an enterprise value of $31.6 billion. Shares outstanding are around 299.2 million and currently Schwab Equity Ratings has it as a C, Credit Suisse Research and Reuters Research Average Rating has it as outperforming, Ned Davis Research and Argus 12 month rating is set to “Buy”. Market Edge Second Opinion Weekly has it set to long.
For 2021, according to insider-monitor, there has been no insider buying but there have been insider sales of 478,477 shares for over $37 million. With option exercises of 387,840 shares.
But things are looking positive for the company, most recently, Goldman Sachs adjusted their price target from $117to $121 and maintains a “Buy” rating.
And for the third year in a row, the company was named GM Supplier of the Year.
As mentioned, Nucor Corp is a few years shy of becoming a Dividend King. If you look at their dividend payouts from 2013 to 2020, the company has increased their dividend.
Currently, the company is paying $1.62 annually ($0.40 quarterly) at an annual dividend yield of 1.69%.
While not a high dividend company, in a way you get both of both worlds of being a dividend stock, and a company who invests their returns back to their growth.
But I do see Nucor Corp playing big role in President Biden’s proposal to spend $2 trillion on infrastructure development.
And they have remained strong during the pandemic and while they did drop a little, I still feel bullish towards Nucor Corp due to accelerating steel prices and a surge in production volume. I also feel that supply chains should hopefully become better throughout the year as demand for steel is strong.
As always, perform your due diligence and do a lot of research before investing. Talk to a financial advisor and find out if Nucor Corp (NYSE: NUE) would be a perfect investment for you.
If I do have regrets, was not buying this while it was still in the $50s.
