Domtar Corp. engages in the design, manufacturing, marketing, and distribution of fiber-based products, which includes communication papers, specialty and packaging papers and absorbent hygiene products. It operates through the following segments: Pulp and Paper, and Personal Care. The Pulp and Paper segment is involved in the design, manufacturing, marketing, and distribution of communication, specialty and packaging papers, as well as softwood, fluff, and hardwood market pulp. The Personal Care segment consists of the design, manufacturing, marketing, and distribution of absorbent hygiene products. The company was founded on March 7, 2007 and is headquartered in Fort Mill, SC.
Number of Employees: 10,000
Analysis FrameworkWe looked for industrial stocks with a dividend yield between 3.69% and 9.6% and found 70. Out of that 70 we removed any that had not increased their dividend each year for the past five years. That left a portfolio of 21 stocks. We then ran three analyses on the group: dividend coverage, value and total dividend return.
Dividend CoverageWe were looking for dividends to be less than 75% of free cash flow. UFS was technically the only one that qualified, although TCP was close at 76%.
ValueThere are many ways we could look at value, but since this is a dividend analysis, we'll consider a stock to be relatively undervalued if its forward dividend yield is higher than the average of the past five years.
UFS has a forward dividend yield 28% higher than its average. With a forward yield of 5.21%, it's also currently above highest dividend yield for the past five years.