Nucor Corporation (NUE), Steel Dynamics, Inc. (STLD): This Dividend Aristocrat Defied the Steel Industry’s Smackdown

The prospects of that business model are so bright that it’s likely that competitors will follow suit, with ArcelorMittal (ADR) (NYSE:MT) having great enough direct-reduced-iron capacity to take advantage of low domestic gas prices while they last. Yet for its part, United States Steel Corporation (NYSE:X) has noted that despite considering such a project near an existing Ohio production plant, it is far from certain whether it will move forward with a joint venture to construct a similar facility.

Nucor Dividend data by YCharts.

As you can see, some special dividends during the high-growth period of the late 2000s boosted Nucor’s total payouts to shareholders for several years. But since 2010, shareholders have had to be satisfied with modest quarter-cent annual increases. Until the industry starts to recover more sharply from the global economic malaise that hangs over steel production currently, investors shouldn’t expect anything other than token increases from Nucor.

When will Nucor boost its payout?
With Nucor having raised its dividend in December, it’s unlikely that shareholders will see greater payouts before the last month of 2013. At this point, though, it’s far more important for Nucor to demonstrate its ability to keep earnings strong enough to provide the cash flow to make distributions without incurring more debt. Doing so will give the company maximum flexibility to take advantage of potentially lucrative strategic combinations, which could enhance its long-term prospects not only to pay greater dividends, but also for share-price appreciation.

The article This Dividend Aristocrat Defied the Steel Industry’s Smackdown originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Nucor. The Motley Fool owns shares of ArcelorMittal.

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