A Steel of a Deal

Commercial Metals Company (CMC) has recently increased their quarterly cash dividend from 9 to 12 cents per share, an increase of 33-1/3%. This new dividend rate is effective with the regular quarterly cash dividend which is to be paid January 24, 2008 to shareholders of record January 10, 2008.

  • This is the 173rd consecutive quarterly cash dividend paid by Commercial Metals Company.

CMC Chief Executive Officer and President Murray McClean noted:

“This increase reflects CMC’s confidence in our business prospects. Rewarding and sustainable increases in our cash dividend rate, as evidenced by this significant increase, are an important element of that continuing effort and demonstrates our continuing aggressive focus on stockholder value.”

Recent Dividend History

This announcement represents CMC’s fourth recent cash dividend increase.

  • In April 2006, CMC’s dividend was increased 67%.
  • Following CMC’s two-for-one stock dividend in May 2006 the cash dividend was again increased by 20% in July 2006 and 50% in November 2006.

As a result of these increases, the cash dividend increased four fold over the past two years.

Commercial Metals has a paltry dividend payout ratio of less than 15% which allows the company to reinvest the majority of profits back into the company…which isn’t a bad idea as CMC currently boasts a Return on Equity of nearly 23%.

About Commercial Metals

Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including miniature steelmills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.

Outlook

Like many of you, I was wondering what the demand for steel would be as we move forward and see declines and weakness in the automotive market throughout the United States.

Analyst, Carol Cowan of Moody’s recently stated that:

“Strong overall global demand has supported pricing in every region throughout 2007, with China again providing tremendous support for global steel consumption”

“Demand in the U.S. has also remained solid, despite weakness in the appliance and automotive markets, largely driven by high levels of commercial construction activity.”

Cowan also singled out several steel companies including Commercial Metals as strong players in the market with a lot of potential to benefit in 2008 because of strong demand for their products.

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