Headquartered in Federal Way, Wash., 109-year-old Weyerhaeuser (WY) chopped its quarterly common payout 80%, from 25 cents to a nickel a share -- and that follows a decrease in December from 60 cents. The combined cuts will save the company some $465 million annually. Weyerhaeuser has been paying dividends without interruption since 1933. Yield: 0.73%. "We are taking many actions, including deferring timber harvest, shutting and curtailing facilities, and reducing costs wherever possible to preserve our long-term value and improve our performance," declared Chief Executive Daniel S. Fulton. The dividend cut "enhances our current liquidity and provides for more financial flexibility, including a possible REIT [real-estate investment trust] conversion, should the board make that decision in the future." Actually, Weyerhaeuser's REIT-conversion notion isn't new: Many investors and analysts have been suggesting for years that this would make the company's timberland business more tax-efficient. Weyerhaeuser pays a 35% tax on income, but rivals structured as REITs pay no income tax. Their investors pay only the 15% long-term capital-gains tax on dividends. But a REIT conversion would require a large payout to shareholders, since REITs must distribute at least 90% of their taxable profits in dividends. Standard & Poor's expects Weyerhaeuser to have cash in excess of $1 billion at the end of this year. The stock changes hands on the Big Board at around 28. Its 52-week range is 65.50 to 18.67.

I’m looking a forest products which are highly correlated to an economic recovery, says Terranova. I think you can trade it with Weyerhauser (WY) which could go to $50 in the next 6 months if the recession eases.

He said another way to play this market is to be highly leveraged on the U.S. economy in stocks like timber companies such as Plumb Creek Timber(PCL) and Weyerhaeuser(WY).

Paper products exposure

Mad About Options: Weyerhaeuser Flashback: The Mad About Options crew takes a look back at Jim Cramer's comments about Weyerhaeuser.
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From a recent Mad Money show:"I think it's OK. It's just OK. I'm just stunned at how low these stocks are falling."

Mad About Options: Weyerhaeuser's Roots Will Hold: The Mad About Options crew reviews Jim Cramer's recent bullish comments about Weyerhaeuser and offers options strategies for traders and investors. Also hear options ideas for Constellation Energy and Office Depot.
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From a recent Mad Money show: "This yields 6% and I think the yield is safe. That's all that matters."

Temple Inland Isn't Settled: Find out why Dave Peltier is skeptical about this packaging maker's ability to sustain its second-quarter success.



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Weyerhaeuser 's P/E is overstated because earnings are likely to be depressed in '09. Weyerhaeuser has valuable timber holdings in the Pacific Northwest that could be worth a good chunk of its market value.

A little downturn in the housing market and this big boy tanks! Don't people use paper anymore?