These 2 Dividend Stocks Could Be a Bargain Right Now

Stelco Holdings Inc. (TSX:STLC) and Russel Metals Inc. (TSX:RUS) have posted rock-solid earnings, as investors remain anxious about trade tensions.

| More on:
win

Steel and aluminum tariffs imposed by the Trump administration have shaken global politics. The United States imposed steel tariffs of 25% in June after NAFTA talks soured in May. This roiled the TSX in the short term, but many companies remained confident that this was a storm that could be weathered.

On August 10, the White House announced that it would increase steel and aluminum tariffs on Turkey to 50% and 20%, respectively. This exacerbated the crisis for the Turkish currency and has escalated a diplomatic feud that has emerged between the two countries. Analysts and economists have warned that the Turkish lira crisis could threaten the global economy in the near term. European banks hold billions in Turkish debt, and there are political ramifications that could impact the Middle East going forward.

This is a concern for investors, but the domestic situation may be getting brighter. There are indications that NAFTA talks are improving. A deal struck before the U.S. midterms in November would likely see the Trump administration scuttle the recently imposed steel and aluminum tariffs.

Today, we are going to look at two metals stocks that could gather momentum depending on how NAFTA talks shake out in the coming weeks and months. Both companies boast strong fundamentals and income for investors to feast on. Let’s take a look.

Stelco Holdings (TSX:STLC)

Stelco stock has slipped in the midst of a sell-off that began on the TSX in the second week of August. The stock has contended with volatility due to trade tensions in 2018, but shares are still mostly flat for the year. Stelco leadership has remained confident that it can survive steel tariffs, as the vast majority of its sales are domestic. However, the company has warned that potential auto tariffs could be damaging, as it has pinned its growth strategy on expansion in the automotive sector.

Stelco released its second-quarter results on July 31. Revenue jumped 67% year over year to $711 million, and adjusted EBITDA soared 130% to $175 million. Stelco announced a special cash dividend of $1.69 per share in addition to its quarterly dividend of $0.10 per share.

Russel Metals (TSX:RUS)(NYSE:RUS)

Russel Metals has also taken a hit due to the global sell-off that impacted the TSX. In early June, I’d discussed why Russel Metals was a buy-low opportunity in spite of steel tariffs. The company released its best quarterly results in a decade on August 9.

Revenues climbed to $978 million in the second quarter compared to $817 million in the prior year. Net income doubled up from $33 million in Q2 2017 to $66 million, while earnings per share rose to $1.07 from $0.52. As I’d discussed in the aforementioned article, Russel Metals did indeed benefit from increases in selling prices that boosted margins. The company was also powered by improved economic activity in North America.

The board of directors also approved a quarterly dividend of $0.38 per share, representing an attractive 5.2% dividend yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

Cameco Stock and More: 3 TSX Commodity Titans to Watch in 2024

Cameco stock and these others will provide you with growth that goes beyond just a year or two, with all…

Read more »

Handwriting text writing Are You Ready For Tomorrow question. Concept meaning Preparation to the future Motivation Stand blackboard with white words behind blurry blue paper lobs woody floor.
Stocks for Beginners

3 Reasons to Buy Lundin Stock Like There’s No Tomorrow

Lundin stock (TSX:LUN) has been killing its production of copper and plans on blowing its records out of the water…

Read more »

Gold bars
Stocks for Beginners

TSX Materials in March 2024: The Best Stock to Buy Right Now

Materials have been quite volatile, though the price of gold has surged to all-time highs. That makes this stock a…

Read more »

Gold bars
Metals and Mining Stocks

Will Gold Stocks Rally in 2024?

Down almost 30% from all-time highs, Franco-Nevada is a gold mining stock trading at a discount to consensus price target…

Read more »

A miner down a mine shaft
Stocks for Beginners

Canadian Mining Stocks: Buy, Sell or Hold?

Canadian mining stocks have seemed like such a strong investment, but with shares down significantly this year, what should we…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Stocks for Beginners

Great News for Gold Stock Investors!

Gold has hit an all-time high! Which is good news for some gold stocks, and really good news for others.

Read more »