Daily Stock Pick: Weyerhaeuser Co

I'm now looking for a third basic materials sector representative for my new Ivy portfolio.

That materials sector has thirteen industries all related to mining, making, and delivering essential commodities. They are: agricultural inputs; aluminum; building materials; chemicals; coal; copper; industrial metals; gold; paper; silver; specialty chemicals; steel.

Today I'm reviewing a large-cap lumber and wood production firm, named Weyerhaeuser Co. Its trading ticker symbol is WY.

Weyerhaeuser Co is a real estate investment trust and is engaged in selling timber. Its objective is to maximize the long-term value of timberlands that it owns. It derives its revenue from investments in timberland, including the sale of standing timber.

Weyerhaeuser Company is one of the world's largest private owners of timberlands, and began operations in 1900.

the company owns or controls 12.4 million acres of timberlands in the U.S. and manages additional timberlands under long-term licenses in Canada on a sustainable basis in compliance with internationally recognized forestry standards.

Weyerhaeuser is also one of the largest manufacturers of wood products. The company is a real estate investment trust. In February 2016, they merged with Plum Creek Timber Company, Inc. In 2017, they generated $7.2 billion in net sales and employed approximately 9,300 people who serve customers worldwide.

The firm is listed on the North American and World Dow Jones Sustainability Indices. The company is headquartered in Seattle, WA.

I use three key data points to gauge the value of any dividend equity like Weyerhaeuser Co:

(1) Price

(2) Dividends

(3) Returns

Besides those three, several other keys will finally unlock an equity or fund in which to invest.

Those first three primary keys, however, best tell whether a company has made, is making, and will make money.

WY Price

Weyerhaeuser's price per share closed at $25.08 Friday. A year ago its price was $35.98. So price dropped $10.90 per share last year, or 30%.

Assuming Weyerhaeuser's stock trades in the range of $20 to $40 next year,  Weyerhaeuser's recent $25.08 price could move up by $2.42 and grow to $28.00 by late-January, 2020.

WY Dividends

Weyerhaeuser's most recent quarterly dividend was $0.34 declared November 9th and paid December 21st.

That $0.34 quarterly payout equates to $1.36 annually and yields 5.42% at Friday's $25.08 closing price.

Gains For WY?

Adding the $1.36 annual estimated dividend to my estimated $2.42 annual price upside estimate for Weyerhaeuser Co shows a $3.78 potential gross annual gain, per share, which will be reduced by costs to trade those shares.

Just over $1,000.00 invested today at the $25.08 recent price would buy us 40 WY shares.

A $10 broker fee paid half at purchase and half at sale costs $0.25 per share.

Subtract that $0.25 brokerage cost from the estimated $3.53 gross annual gain leaves a net gain of $3.28 X 40 shares

= $131.20

for about a 13% net gain on a $1,003.20 investment.

Therefore, Weyerhaeuser Co whose trading ticker symbol is WY, now shows a possible 13% net gain including a 5.42% dividend yield.

Eleven brokers cover this stock:

Four say "buy" WY.

Two say WY will "outperform" peers.

Five say "hold" your WY shares.

The broker recommendations average out to an "Outperform " level.

Therefore, you can look at Weyerhaeuser Co and see it has made money, is making money, and could rise to net a 13% annual gain including that 5.42% estimated dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. The actual results remain to be seen to determine if Weyerhaeuser Co is worth your time and money.