Dividend Kings in Focus: Nucor Corporation

Updated on July 9th, 2025 by Felix Martinez

The Dividend Kings are a select group of stocks that have increased their dividends for at least 50 consecutive years. We believe the Dividend Kings are among the highest-quality dividend growth stocks.

With this in mind, we created a full list of all the Dividend Kings.

You can download the full list, along with important financial metrics such as dividend yields and price-to-earnings ratios, by clicking the link below:

A relatively new member to join this list is Nucor Corporation (NUE), a prominent American steel producer. Nucor has successfully navigated the industry’s cyclical nature, consistently growing its dividend.

This article will provide an overview of the company’s business, its growth prospects, competitive advantages, and expected returns.

Business Overview

Nucor is headquartered in Charlotte, North Carolina, and is a giant in the steel industry as the largest publicly traded US-based steel corporation based on its market capitalization. The company currently operates in three segments: Steel Mills (the largest segment by revenue), Steel Products, and Raw Materials.

The steel industry is notoriously cyclical, which makes Nucor’s streak of 52 consecutive years of dividend raises even more remarkable. The company faces challenges from international competitors. Some countries (including China) subsidize their steel industry, making steel exported to the United States artificially cheap.

Nucor manufactures a wide variety of materials, including sheet steel, steel bars, structural forms, steel plates, downstream products, and raw materials. The majority of the company’s production is derived from a combination of sheet and bar steel, a trend that has been consistent for many years.

Nucor has been successful over the long term thanks to its focus on low-cost production. This allows the company to maintain profitability during downturns and produce significant operating leverage during better times.

Additionally, it has expanded its product offerings to new markets while maintaining and growing its market leadership in existing channels.

Nucor Corporation reported Q1 2025 net earnings of $156 million ($0.67 per diluted share), down from $845 million ($3.46 per diluted share) in Q1 2024. Adjusted net earnings were $179 million ($0.77 per diluted share), excluding $29 million ($0.10 per share) in one-time charges for facility closures. Net sales fell 4% to $7.83 billion from $8.14 billion, with a 12% drop in average sales price per ton, offset by a 10% rise in shipments to 6.83 million tons. EBITDA was $696 million, and net earnings before noncontrolling interests were $226 million.

Segment performance showed Steel Mills earnings at $231 million (down from $1.1 billion), Steel Products at $288 million (down from $512 million), and Raw Materials at $29 million (up from $9 million). Corporate/eliminations reported a $263 million loss. Operating rates at steel mills were 80%, up from 74% in Q4 2024. Scrap costs per ton fell 6% to $394. Pre-operating and start-up costs rose to $170 million ($0.56 per share). Operating cash flow was $364 million, with capital expenditures totaling $859 million. Nucor repurchased 2.3 million shares for $306 million and paid $129 million in dividends.

Nucor expects Q2 2025 earnings to increase, driven by higher steel mill prices, increased steel product volumes, and improved raw materials margins. CEO Leon Topalian emphasized solid demand, a strong balance sheet, and a diverse portfolio, positioning Nucor to navigate market volatility and deliver long-term value. The company maintained $4.06 billion in cash and short-term investments and increased its credit facility to $2.25 billion, retaining top-tier credit ratings.

Source: Investor Presentation

Growth Prospects

We believe that Nucor’s earnings per share are likely to increase by ~20% per year on average over the next five years. Nucor’s earnings per share are highly sensitive to steel prices. The company’s previous all-time earnings-per-share high came in 2008, which coincided with the all-time high price of steel in the US.

The factors that drove the enormous earnings of 2021 and 2022, which include pent-up demand after the pandemic and blowout steel prices amid supply chain disruptions, are unsustainable.

For the long term, Nucor’s markets have a largely favorable growth outlook. Nucor’s diversification across end markets also offers some relative stability during downturns. This helps the company perform well compared to other steel makers during recessions.

Nucor is also investing in growth initiatives that include harvesting new revenue synergies, improving operational and supply chain efficiencies, and expanding the business’s product offerings and geographic footprint.

Source: Investor Presentation

Competitive Advantages & Recession Performance

Nucor is a manufacturer and distributor of steel, which, like the vast majority of raw materials businesses, is fundamentally a commodity product and therefore subject almost entirely to price as its sole differentiator.

Warren Buffett has the following to say about commodity businesses:

“Stocks of companies selling commodity-like products should come with a warning label: ‘Competition may prove hazardous to human wealth.’” – Warren Buffett

Certainly, commodity businesses are not the most defensive businesses due to their cyclicality. This can be seen by looking at Nucor’s performance during the 2007-2009 financial crisis:

2007 adjusted earnings-per-share: $4.98
2008 adjusted earnings-per-share: $6.01
2009 adjusted earnings-per-share: net loss of ($0.94)
2010 adjusted earnings-per-share: $0.42
2011 adjusted earnings-per-share: $2.45

As a commodity producer, Nucor is highly vulnerable to fluctuations in the price of steel. Steel demand is tied to construction and the overall economy. During the Great Recession, the company’s earnings per share declined from $6.01 in 2008 to a loss per share of -$0.94 in 2009, and the stock lost two-thirds of its market capitalization in just six months.

Investors should be aware of the significant downside risk associated with Nucor, as the steel producer is likely to perform poorly in a prolonged recession.

Valuation & Expected Total Returns

We assume a normalized earnings power per share of $6.75 for 2025 to smooth out the cyclicality of the results. That puts the price-to-earnings power ratio at 20.6, which is higher than our fair value estimate of 12.0. For steel producers, we remain more cautious than the general market, in no small part due to the volatility of commodity prices.

As a result of our modeling assumptions, Nucor is slightly overvalued today. A compressing valuation multiple could decrease annual returns by 9% over the next five years.

Additionally, the stock boasts a current dividend yield of 1.6%. Finally, we expect Nucor’s earnings per share to increase by about 20% per year. As a result, total returns are expected to be only 12.6% per year on average over the next five years. Due to its low expected return, the stock has a hold rating around its current price.

Final Thoughts

Nucor’s status as a Dividend King helps it stand out among the highly volatile materials sector. There are very few raw materials businesses that have multi-decade track records of compounding their dividends and adjusted earnings per share.

Nucor has a low dividend yield when compared to the broader stock market, but the company has a long history of annual dividend raises. Nucor also has a strong industry position and a healthy balance sheet.

However, the stock does not merit a buy recommendation at the current price, given its fair expected returns. For investors seeking exposure to raw materials, we recommend waiting for a more favorable opportunity to acquire Nucor shares.