1 Dividend Juggernaut Down 39% to Buy on the Dip

President Donald Trump's sweeping tariffs have thrown a monkey wrench into the growth plans for some of the largest companies in the U.S. Nucor (NYSE: NUE), however, remains undeterred, and its CEO Leon Topalian has even publicly supported Trump's tariff policy. The Trump administration, after all, imposed a 50% tariff on steel and aluminum imports effective June 4, and that should work in favor of Nucor, also North America's largest and most diversified steel producer.

Nucor is already sitting on its highest backlog ever and just provided an upbeat guidance for its second quarter. Nucor is also a Dividend King -- a label only a handful of publicly listed companies in the U.S. can boast of -- and recently declared its 209th consecutive quarterly dividend. The steel stock, however, is still trading almost 39% off its all-time highs as of this writing, making it a dividend juggernaut you'd want to buy hand over fist on the dip.

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Image source: Getty Images.

Why Nucor is primed to grow under Trump

In a post-first quarter interview with CNBC, Topalian revealed that Nucor's backlog is at its highest ever in the history of the company, reflecting strong demand for steel and steel products.

Meanwhile, Nucor increased the prices of some of its core products like hot-rolled coil effective June 9, soon after Trump imposed 50% tariffs on steel and aluminum imports under Section 232 trade policy to protect America's steel and aluminum industries from unfair trade practices, competition, and import dumping.

Nucor already expects higher prices to drive earnings across all three of its segments -- steel mills, steel products, and raw materials -- in the quarter ending July 5. Importantly, Nucor expects its core business, steel mills, to record the largest earnings growth. Steel mills accounted for 61% of total external sales in fiscal year 2024. Nucor is a vertically integrated company and sells 80% of the steel produced externally while using the remaining to manufacture steel products.

Vertical integration is also among Nucor's biggest competitive advantages. Since Nucor's steel mills manufacture steel mainly from scrap produced in-house by its raw materials segment, the company is insulated from external raw material cost and supply shocks. To top that, the electric arc furnaces Nucor uses to manufacture steel are far more flexible and cost effective than the traditional blast furnaces.

Nucor is now building a large steel mill in West Virginia that could come online by late 2026 to serve non-residential construction and infrastructure markets. Meanwhile, it is adding more value-added products and diversifying its product mix to boost margins. Examples include its recent acquisitions of a data center infrastructure company and a manufacturer of high-speed commercial doors.

These moves, combined with Trump's policies to curb steel imports and boost the steel industry in the U.S., should drive Nucor's profits higher in 2025 and beyond. As its earnings grow, so should Nucor's dividends and share price.

A no-brainer dividend stock to buy now

Income investors are often wary of cyclical stocks, fearing that companies whose sales and earnings ebb and flow with commodity prices and economic cycles could fail to pay regular dividends. As a Nucor shareholder, you can put those fears to rest since this company has been very disciplined with capital allocation since inception. While maintaining a strong balance sheet and investing in growth, Nucor aims to return at least 40% of its net earnings to shareholders.

NUE data by YCharts.

So far, Nucor has increased its dividend for 52 straight years, and that has hugely contributed to its stock's returns. With reinvested dividends, Nucor stock has more than tripled investors' money in the past decade and generated a staggering 800% returns in 20 years. If you notice, the stock has surged since 2020 ever since Topalian took the helm.

Those massive returns are also a reminder for investors to look beyond dividend yields when buying dividend stocks. Nucor stock yields only 1.8%, but its dividend stability and growth easily make up for it as evidenced by the chart above, making it one of the best dividend stocks to buy on any dip.

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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.