Price cuts for iron ore and a perceived bottoming out of the economy are helping to lift steel stocks. However, steel prices have plunged from last year's record level as demand has declined. That's caught up with dividends at Steel Dynamics. The minimill company (STLD) makes structural steel and steel-bar products and is one of the largest U.S. metal recyclers. On Tuesday, it slashed its quarterly payout 25%, to 7.5 cents a share from a dime, for an annual saving of some $18 million. It initiated payouts in 2004 and had been enhancing them every year. Shareholders of record June 30 will receive the reduced payout July 10. The ex-dividend date is June 26. Fort Wayne, Ind.-based Steel Dynamics also said that it will sell 27 million shares and offer a $150 million aggregate principal amount of convertible senior notes due 2014. The proceeds from the offerings will help repay a term-loan balance of $552 million, as of March 31. In a note to investors, analyst Brian Yu of Citi Investment Research called the transaction a "net positive" for the company, whose debt has "been an ongoing overhang." Standard & Poor's on Wednesday removed Steel Dynamics from CreditWatch and affirmed its less-than-investment-grade double-B-plus credit rating with a negative outlook. S&P analyst Marie Shmaruk said the rating reflects the company's exposure to highly competitive and cyclical markets, aggressive growth plans that include significant capital expenditures, acquisitions and high debt. On the plus side, Steel Dynamics has a "very low cost position, flexible operations and improved product diversity," Shmaruk added.

growth

strong stock buy back program & growth

From a recent Mad Money show:"It's OK. Both United States Steel (X) and Nucor (NUE) are better names. I'd want either of those before yours."

From a recent Mad Money show:): "If we want a steel company we're going to buy Nucor (NUE), but only once that one comes down a bit."

From a recent Mad Money show:"If we want a steel company we're going to buy Nucor (NUE), but only once that one comes down a bit."

From a recent Mad Money show:"If we want a steel company we're going to buy Nucor (NUE), but only once that one comes down a bit."

From a recent Mad Money show:"Why would I buy that one when I have United States Steel (X) and Nucor (NUE) all the way down at their 52-week lows. I like either of those more."

PE of 3, a PEG of 0.29, and it pays a yield of 4.2%.

Goldman said it is downgrading Steel Dynamics (STLD) to neutral from buy based on potential downside to near-term earnings. Company's FIFO accounting makes it unlikely that it wlil benefit from lower scrap costs. Also note company's high leverage. Target cut to $11 from $34.

Supply has caught
demand.