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July 10, 2010
Edited: July 11, 2010
Share ThisI will buy in my portfolio on dips for long term hold. Good dividend yield
RYN = http://www.investors.com/NewsAndAnalysis/Article.aspx?id=539711&ven=yahoo
Canadian Bug Boosts Demand For U.S. Timber
By PATRICK CAIN, INVESTOR'S BUSINESS DAILY
Posted 07/08/2010 06:04 PM ET
Timber producers in British Columbia are losing a battle with beetles. The pesky bug has damaged forests and exports. That's good news for U.S. firms such as Rayonier (RYN), a primarily Southern timber real estate investment trust that offers investors a 4.4% dividend yield.
"The timber cycle is very tied to housing, but I do believe we will see structural shifts in the next cycle," said Anna Torma, an analyst for Soleil Securities. "The structural shift is that historically one-third of lumber has come from Canada. You'll see a lot less B.C. timber coming into the U.S. market for the next 60 years. That puts increased demand on the Southern timber."
The beetle isn't a concern to Rayonier, as the arthropod likes a specific type of old tree that isn't used in the South.
That will help Rayonier as the housing industry struggles. Once the sector picks up, the firm is an interesting play on housing, she adds.
This is only one of Rayonier's three main segments.
The strongest lately is its high performance fibers. This is a high-end product that's a specialty niche market.
Few competitors exist, making it a rather safe segment. Performance fibers offer stable margins, and that provides a bulk of the cash flow that creates the stable dividend despite the overall tough economic climate, Torma says.
The third segment is land it owns that eventually will be developed.
Rayonier has about 200,000 acres that Torma said is "higher, better use" land. This is prized property that will ultimately be developed around the I-95 corridor, she says.
Shares are currently finding support at the 40-week moving average and resistance at the 10-week average.
I WILL BE BUYER ON DIPS AND THEN HOLD FOR DIVIDEND YIELD OR BUY SOME NOW AND ADD ON DIPS Please do your own home work
