1 Rich Dividend Stock to Buy and Hold Forever

Find out why this could be a good year for Russel Metals (TSX:RUS), and why investors may want to hold onto shares for the long term.

| More on:
Profit dial turned up to maximum

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Paying a meaty 8.8% dividend based on a share price of $17.42, Russel Metals (TSX:RUS) is one of the richest-yielding stocks on the TSX. A play for infrastructure, construction, and North American industry as a whole, this stock is more diversified than meets the eye. Here’s why Russel Metals is also a better pick for 2020 than nine out of 10 other high-yielding Canadian dividend stocks.

Forget energy and financial stocks this summer

2020 is tough. Banking is tanking. Energy is anything but energetic. Insurance brings very little assurance. As such, any dividend yield on offer from a company in these sectors in 2020 should be taken with a big pinch of salt. So, that’s the majority of high-yield dividend stocks ruled out for low-risk investors. This is especially the case for those investors with near-term financial goals, such as retirees.

If you are focused on the near term, August 1 might prove to be one of the dates upon which the markets pivot in 2020. This is the date that Democratic presidential nominee Joe Biden is slated to announce his presumptive pick for VP. Stock markets don’t deal well with surprises. And whoever Joe picks in just over a week is likely to be divisive. However, Russel Metals might be a solid choice come next month.

Metals investors should keep an eye on headlines. Whoever Joe Biden picks as his second in command is likely to resonate with his base. This is likely to cause turbulence in the markets—especially so if Republican voters sense the tide turning against the current occupant of the White House. Either way, August 1 could be a good day for Canadian metals depending on how the media handles the announcement.

A coming boost for Canadian metals stocks?

Now, tariffs are less of an issue for Russel Metals than they would be for a metals producer exposed to cross-border trade. As a stock that doesn’t rely heavily on cross-border trade, Russel Metals is better placed than most to thrive during a trade dispute. However, looking at this stock’s valuations, it’s likely (from a P/B of 1.1 times book, for instance) that investors have nevertheless tarred it with the same brush as trade-reliant producers.

Industrials rose on a relief rally last week when some positive early news boosted vaccine bulls. So that’s one point to metals stocks. Point two is awarded for Russel Metals simply being a metals stock in a U.S. election year. A Democrat win could see the end of protectionist measures that have been weighing on Canadian metals as well as other key materials.

Since cross-border trade could become easier under a Democrat administration, Russel Metals could see a knock-on lift from a Biden win in November. But don’t hold your breath. The potential for electoral chicanery abounds. The markets may also disapprove of anything but a Republican win. After all, profound change is kryptonite to stock markets. Accordingly, investors should carry on balancing portfolios with safe havens and liquidity.

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 Victoria Hetherington has no position in any of the stocks mentioned.

More on Dividend Stocks

money cash dividends
Dividend Stocks

Want Passive Income? 1 TSX Stock for $8/Day in Dividends

If you need cash right away, then this TSX stock can make you passive income from a stable dividend that…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

Canadian dividend stocks make for great long-term buy-and-hold investments.

Read more »

value for money
Dividend Stocks

3 Incredibly Cheap Dividend Stocks to Buy for Dependable Passive Income

Now is an excellent time to load up on Canadian dividend stocks. Here are top picks that are all trading…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Simple TSX Stocks to Buy With $25 Right Now

Canadians with capital of as low as $25 can purchase three simple stocks right now and earn recurring passive income…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 No-Brainer U.S. Stocks for Investors in August

Here are two undervalued U.S. stocks to diversify your investment portfolio. They both pay safe and growing dividends!

Read more »

Growth from coins
Dividend Stocks

1 Dividend Juggernaut That Could Grow Fast in a Recession

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock looks way too cheap to ignore, even going into an economic downturn.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

The 3 Best Dividend Stocks for Monthly Passive Income

These three dividend stocks are the best options for those seeking high passive income in the next few years in…

Read more »

clock time
Dividend Stocks

Got $10,000 to Invest? 1 Cheap TSX Stock to Buy Right Now

This top TSX dividend stock is finally on sale and has made some savvy buy-and-hold investors quite rich.

Read more »