The basic materials sector is highly cyclical. It relies on a strong economy to create demand for its raw materials. Since most of its products are considered to be commodities, the sector is sensitive to supply and demand fluctuations with end-users able to substitute based on price.
Historically, yields in this sector have been on the lower end of the scale. However, with increased demand for certain raw materials the stocks in this sector could begin to see higher yields with increased profitability.
This week, I screened my dividend growth stocks database for Basic Materials companies with a yield above 2.0% and that have increased their dividends for at least 10 consecutive years. The results are presented below:
Monsanto Co. (MON) is a global provider of agricultural products and integrated solutions for farmers. The company has paid a cash dividend to shareholders every year since 2001 and has increased its dividend payments for 14 consecutive years. Yield: 2.0%
RPM International Inc. (RPM) makes specialty coatings and products for structural waterproofing and corrosion control, as well as products for the consumer, do-it-yourself and hobby markets. The company has paid a cash dividend to shareholders every year since 1969 and has increased its dividend payments for 42 consecutive years. Yield: 2.0%
Air Products and Chemicals Inc. (APD) is a major producer of industrial gases and electronics and specialty chemicals also has interests in environmental and energy-related businesses. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 34 consecutive years. Yield: 2.0%
Praxair Inc. (PX) is the largest producer of industrial gases in North and South America. It also provides ceramic and metallic coatings. The company has paid a cash dividend to shareholders every year since 1992 and has increased its dividend payments for 23 consecutive years. Yield: 2.6%
Nucor Corporation (NUE) is the largest minimill steelmaker in the U.S., Nucor has one of the most diverse product lines of any steelmaker in the Americas. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 43 consecutive years. Yield: 2.8%
MDU Resources Group Inc. (MDU) is involved in electric and natural gas distribution, natural gas storage, gathering and transmission, construction materials and mining, and oil and natural gas production. The company has paid a cash dividend to shareholders every year since 1937 and has increased its dividend payments for 26 consecutive years. Yield: 3.1%
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 250+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: No position in the aforementioned securities. See a list of all my Dividend Growth Portfolio holdings here.
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