July 9, 2012
The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves discusses topics across the investing world.
Over the next several weeks, I'll be looking at each of the components of the Dow Jones Industrial Average and subjecting each of them to a dividend checkup. Today, we're looking at Alcoa. Alcoa is one of the biggest producers of aluminum in the world. It has struggled lately, however. Its stock is up around 4% so far this year, though it has fallen around 7% since April. The Dow is up 6% or so for the year. The company pays a dividend yield of just 1.3%, which compares to 2.9% for the Dow Jones average. Alcoa cut its dividend sharply in 2009, and hasn't raised it since. Among its competitors are Aluminum Corporation of China and Century Aluminum Co., neither of which pay a dividend. Alcoa is a cyclical company that is very much tied to the performance of the global economy. With Europe and possibly China exhibiting signs of a slowdown, that could be a problem for Alcoa. One way or another, this doesn't seem like a compelling income-generating stock. There are better ones than this out there.
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