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Worthington's On A Roll

ByDouble Dividend Stocks
Published 07/16/2012, 10:45 AM
Updated 07/09/2023, 06:31 AM
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Looking for dividend stocks with market support?

Steel and Metal processor Worthington Industries, (WOR), has been on a roll since its June 4 lows, rising over 42% vs. the S&P, which has gained approx. 6%. This dividend stock has done better than the Steel & Iron industry, which is up approx. 4% in the same period, but is still down 9% for the year vs. WOR’s big 36.72% gain:

Earnings Growth: A big part of the attraction for WOR stems from its EPS growth figures, which show it to still be undervalued on a PEG basis for next year’s earnings.

Dividends: WOR has increased quarterly dividends twice in 2011 and 2012, going from $.10 to $.13/share.

Cash Secured Puts: After WOR’s big run up, you moght be leery of “buying high”.  Selling cash-secured put options is one way to avoid this.  Here’s a put options trade that expires in December (from our free Put Options Table.). This put option pays over seven times WOR’s next two dividends and you’ll have a lower break-even cost.

Covered Calls: Since WOR’s $22.50 call strike price is below its $22.71 share price, this covered call trade cuts into potential assigned price gains, if the stock gets assigned/sold at expiration. However, WOR’s fairly high options yields still offer a nearly 30% annualized net yield. In general, in a rising market, it often pays to sell covered calls above the stock’s current price, in order to leave room for potential price gains.


Financials:  WOR’s mgt. efficiency ratios are mostly in line with its industry and its debt load is lower. It does have a slim Operating Margin however.

Disclosure:  Author had no positions in WOR at the time of this writing.
Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

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