Kaiser Aluminum: Investor Pessimism Has Left An Appealing 4.6% Dividend Yield On Cost

Carles Diaz Caron
1.07K Followers

Summary

  • Revenues are expected to decline by 7% in 2023 due to customer destocking and weak demand but will start slowly recovering in 2024.
  • Profit margins have recently improved significantly, and the company is already reporting positive net income.
  • The company is profitable again and is converting its very high inventories into actual cash.
  • The recent share price decline left a 4.6% dividend yield on cost.
  • This represents a good opportunity for long-term dividend investors despite short-to-medium-term risks.

Almacén de placas de acero. Productos metálicos laminados.

SimoneN/iStock via Getty Images

Investment thesis

In September 2022, I wrote an article about Kaiser Aluminum (NASDAQ:KALU) as inflationary pressures, labor shortages, and rising transportation costs lasted for longer than initially expected by many investors while supply chain issues

This article was written by

1.07K Followers
Subscribe for an average ~14% return per year according to Tipranks. I am a long-term Dividend Growth Investor always looking for new opportunities in the stock market since 2015. In order to find good deals in the stock market, I look for companies that are going through a bad time and carefully assess the chances that the financial situation will return to the path of profitability and growth. My objective is to find stocks that can be bought and held for many years and try to get them for the lowest price possible during temporary headwinds. For me, the most important aspects when analyzing a stock's turnaround chances are that the company's products are essential to a big portion of the population, healthy and stable profit margins, a sustainable debt and dividend, and a long-term trend that suggests the products and services offered will continue to be essential for the decades to come.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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