1 Canadian Metal Stock (With Dividends) I’d Buy Right Now

This metal stock could be one of the best Canadian dividend stocks to buy right now.

| More on:

Image source: Getty Images

Canadian metal stocks continue to remain highly volatile in 2022. After a sharp rally in commodity prices across the board took them higher in the first quarter, the shares of metal-linked companies witnessed a sharp correction in the second quarter, as concerns about slowing global economic growth worried investors.

While macroeconomic uncertainties may also keep these stocks volatile in the coming months, the recent dip has made the shares of some fundamentally strong metal-linked companies look really attractive.

In this article, I’ll highlight one of the best Canadian metal stocks with solid dividends investors can buy this week to hold for the long term.

Russel Metals stock

Russel Metals (TSX:RUS) is a Mississauga-based metals processing and distribution company with a market cap of about $1.8 billion. The company primarily focuses on value-added processing of metals with its large network of metals service centres across North America. On a year-to-date basis, RUS stock has fallen by 16.8% year to date to $27.98 per share, underperforming the broader market. By comparison, the TSX Composite Index has seen a 9.2% value erosion in 2022.

Based on its 2021 financial figures, nearly 67% of Russel’s total revenue came from its metals service centers segment, while the remaining came from its energy products and steel distributors segments. Geography-wise, Canada accounted for nearly 64% of its total revenue last year, with the remaining 36% coming from the U.S. market.

Improving operating performance

In the last couple of years, Russel Metals has managed to significantly improve its financial growth trends due mainly to strong demand in its metals service centres and steel distributors segments. This was one key reason why the company registered a solid 56.6% YoY (year-over-year) increase in revenue to $4.2 billion in 2021. Similarly, a strong steel price environment helped Russel Metals post solid expansion in profitability, as it reported an outstanding 725% jump in its 2021 adjusted earnings to $6.96 per share.

Higher average steel prices continued to contribute positively to its financial growth in the second quarter (Q2) of 2022. In Q2, the Canadian metal distribution company’s revenue rose 27.5% YoY to $1.4 billion, helping the company register a 4.3% YoY growth in its adjusted quarterly earnings to $1.96 per share.

Why this Canadian dividend stock is worth buying now

In the last year, steel prices have seen a sharp correction due mainly to growing fears of a looming recession. Despite recent declines, however, steel prices could witness a sharp rally in the coming quarters as its demand is likely to increase. According to the World Steel Association’s estimates, global steel demand is likely to rise by 2.2% in 2023 — up from an expected increase of about 0.4% in the ongoing year. This expected rise in the demand and constrained supply could lead to a sharp recovery in steel prices and accelerate Russel Metals’s financial growth trends further, helping RUS stock soar.

Apart from these positive mental factors, Russel Metals stock could be a great buy for long-term dividend investors, as it has been paying quarterly dividends for the last 82 quarters in a row. At the current market price, this Canadian metal stock has a strong dividend yield of about 5.4%.

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

A miner down a mine shaft
Metals and Mining Stocks

1 Canadian Mining Stock to Buy and Hold Forever

Cameco (TSX:CCO) stock is looking way too cheap to ignore after the latest correction off highs.

Read more »

Arrowings ascending on a chalkboard
Metals and Mining Stocks

If This Fast-Rising Stock Isn’t Yet on Your Radar, it Should Be

This stock is up 44% in the last year and climbing, and yet there is even more to come with…

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Metals and Mining Stocks

Is Agnico Eagle Mines a Buy in July 2024?

Although quite a few gold stocks are worth looking into for their dividends, the less-than-modest capital-appreciation potential can be a…

Read more »

Gold bars
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Want to invest in precious metals? Here's the best gold stock to buy right now, and it isn't a traditional…

Read more »

A worker wears a hard hat outside a mining operation.
Metals and Mining Stocks

1 Canadian Mining Stock Worth a Long-Term Investment

This mining stock has a huge future ahead of it, especially as copper surges in demand around the world. And…

Read more »

People walk into a dark underground mine.
Metals and Mining Stocks

How to Turn Your TFSA Into a Gold (or Copper) Mine Starting With $10,000  

These two top stocks can turn any TFSA into a gold mine -- or a copper mine, if you really…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

1 Canadian Mining Stock to Buy and Hold Forever

Canadian investors can consider gaining exposure to quality mining stocks such as Wheaton Precious Metals in June 2024.

Read more »

A stock price graph showing growth over time
Metals and Mining Stocks

Why Cameco Stock Soared 23% This Year

Cameco stock continues to ride high on strong supply/demand fundamentals and growing momentum in the nuclear industry.

Read more »