Luxembourg-based steel producer Ternium (TX) delivers a more than a 7% dividend yield and possesses solid growth attributes. So, let’s find out why it is wise to bet on the stock now, even though its EBITDA could decline in the fourth quarter. Read on.Based in Luxembourg, Ternium S.A. (TX) is Latin America’s leading flat steel producer, operating facilities in Mexico, Brazil, the Southern United States, and Central America. The company expects its fourth-quarter EBITDA to decline slightly. However, its volumes sold in the USMCA region are expected to increase in the quarter. Also, its shipments are expected to remain steady in Argentina.
TX has been paying dividends consistently every year since 2007. Its dividend payout has grown at a 38.1% CAGR over the past three years and 26.4% over the past five years. While the four-year average dividend yield for TX is 3.62%, the current dividend translates to a 7.11% yield. On on November 19, it paid a $0.08 per share ($0.80 per ADS) interim dividend, totaling roughly $157 million in aggregate. The stock has gained 7.2% in price over the past month and 24% over the past six months to close yesterday’s trading session at $40.77.
TX signed a memorandum of understanding with Vale S.A. (VALE) on August 19 to pursue opportunities to develop steelmaking solutions focused on reducing carbon dioxide emissions. And according to a Research and Markets report, the steel market is expected to grow by 614.20 million tons over the next five years, benefitting TX. So, its near-term prospects look promising.