Nucor (NUE 1.10%) is among the largest steelmakers in North America, however that is not what separates it from the pack. The large story right here is the truth that Nucor is a Dividend King. And proper now, the inventory seems to nonetheless be in Wall Road’s doghouse, which may very well be a shopping for alternative for buyers whose holding interval is endlessly. Here is what you want to know.
What does Nucor do?
Nucor makes metal, however that is solely a part of the story. The opposite piece is that it makes use of electrical arc mini-mills within the course of. This expertise tends to be extra versatile than blast furnaces that make major metal. Thus, the corporate can ramp manufacturing up and down primarily based on demand extra simply. That permits it to assist its revenue margins via the business’s cycles.
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The steelmaking cycle is value contemplating. Demand and pricing usually rise and fall together with financial exercise. Given the economic significance of metal, that is sensible. Nonetheless, it additionally signifies that the enterprise is a bit risky and the inventory is susceptible to extensive worth swings.
Proper now, the inventory is down round 30% from the peaks it achieved in 2024. That appears like an enormous decline, however it’s really an enchancment from the greater than 40% it had been down earlier than a rally.
Declines of 40% or extra occurred in 2020 and 2022. So basically, that is actually only a regular swing. However that does not imply it’s best to ignore the chance right here.
NUE knowledge by YCharts.
Nucor is a Dividend King
Regardless of the inherent volatility of the metal sector, Nucor has managed to extend its dividend each single yr for over 50 consecutive years. An organization does not obtain Dividend King standing accidentally; it requires a powerful enterprise mannequin that’s effectively executed in each good markets and unhealthy.
Actually, administration’s purpose is mostly to supply increased highs and better lows for its enterprise. It does this with a capital funding plan that focuses on upgrading expertise; increasing product choices; and broadening out to incorporate new, increased margin merchandise.
As the corporate’s enterprise grows so, too, does its capability to generate income and earnings. And that results in increased highs and better lows on the earnings entrance over time.
With roughly $3 billion in capital spending on faucet in 2025, extra development appears possible for the enterprise and the dividend. That stated, it is very important spotlight one factor: The dividend yield is only one.7%. This is not a inventory you purchase since you want revenue. It’s a inventory you purchase since you need long-term publicity to the metal sector, and also you need to get that publicity through the business’s most dependable dividend inventory.
You purchase Nucor when Wall Road is placing it on sale
As a cyclical inventory, the perfect time to purchase Nucor is not when buyers are enamored with it. The time to step aboard is when the inventory is out of favor, which stays the case at the moment.
Would it not have been higher to purchase when the inventory was down over 40%? Certain, however 30% remains to be a fabric drawdown, and in case you are desiring to personal Nucor for the long run, the value stays engaging. The important thing to the story, nonetheless, is that this Dividend King has proved that its enterprise mannequin can survive absolutely anything the market and the financial system throws at it.
