Steel Dynamics Bumps Up Q1 Dividend; Street Remains Cautiously Optimistic

Steel Dynamics announced a 4% hike in its quarterly dividend to $0.26 per share. Shares of the domestic steel producers and metals recyclers closed 1.16% lower on Friday.

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Steel Dynamics (STLD) said that the new quarterly dividend will be paid on April 16 to shareholders of record as of March 31. Its annual dividend of $1.04 per share now reflects a dividend yield of 2.5%.

The company’s CEO Mark D. Millett said, “We are pleased that our board of directors took this action, based on our confidence in the current and anticipated future strength of our cash flow generation capability and strong financial position.” He added, “Our differentiated business model coupled with our passionate and dedicated team, are critical components that drive our best-in-class through-cycle operating and financial performance.”

Last month, the company reported better-than-expected 4Q results. Earnings grew 56.5% to $0.97 per share and topped the consensus estimate of $0.83 per share. 4Q revenues came in at $2.6 billion, which grew 10.7% year-over-year and exceeded analysts’ expectations of about $2.53 billion. (See Steel Dynamics stock analysis on TipRanks)

On Feb. 3, Credit Suisse analyst Curt Woodworth upgraded the stock to Buy from Hold and raised the stock’s price target to $52 (25% upside potential) from $32. In a note to analysts, Woodworth said that the company has an attractive long-term growth story in steel.

Overall, the rest of the Street maintains a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average analyst price target of $44.80 implies upside potential of about 8% to current levels. Shares have rallied about 54% over the past year.