Updated 3/11/2025
NACCO Industries (NYSE: NC) is a company that often flies under the radar, but for those who value stable dividend income, it’s worth a closer look. Best known for its coal mining operations through North American Coal Corporation, NACCO has carved out a niche in the energy sector. While the industry itself is undergoing significant shifts, the company has managed to maintain a steady financial footing.
With a market cap of about $240 million, NACCO is relatively small, but its disciplined financial approach and focus on shareholder returns make it an interesting option for dividend-focused investors. The stock offers a reasonable yield, a strong balance sheet, and a payout ratio that suggests stability. However, there are also risks to consider, particularly around cash flow and industry headwinds.
Let’s take a closer look at NACCO’s dividend profile, financial health, valuation, and potential risks to see how it stacks up for long-term income investors.
Key Dividend Metrics
📢 Dividend Yield – 2.81% (a solid income stream above the market average)
💰 Annual Dividend Payout – $0.91 per share (sustainable based on earnings)
📈 5-Year Average Dividend Yield – 2.65% (consistent income over time)
🔁 Dividend Growth Rate – Modest increases, but not aggressive
🔒 Payout Ratio – 19.65% (low, indicating strong dividend safety)
📅 Next Ex-Dividend Date – March 3, 2025 (must own shares before this date to receive the next dividend)
Dividend Overview
At first glance, NACCO’s dividend may not seem particularly exciting, but it has a lot going for it. With a yield of 2.81%, it provides a steady income stream that has been relatively stable over the years. The company has a payout ratio of just under 20%, meaning it distributes only a small fraction of its profits to shareholders. This leaves plenty of room for reinvestment and financial flexibility.
While some companies aggressively hike their dividends every year, NACCO takes a more conservative approach. It has a history of slow but steady dividend growth, which may not be ideal for those looking for rapid increases. However, for investors who value reliability over flashy growth, this stability can be reassuring.
Dividend Growth and Safety
One of the most important factors when evaluating a dividend stock is whether the company can sustain its payouts over the long term. In NACCO’s case, the numbers suggest a healthy level of security.
The company’s earnings support its dividend comfortably, with a low payout ratio indicating that there’s little risk of a cut in the near future. However, there are some areas to watch. The company’s free cash flow is currently negative, which isn’t ideal for long-term dividend growth. That being said, NACCO has a strong cash position and relatively low debt levels, which provides a cushion.
If earnings remain steady, there’s room for future dividend increases. But given the company’s cautious approach, investors shouldn’t expect aggressive hikes anytime soon.
Chart Analysis
The stock price of NACCO Industries (NC) has been moving in a fairly defined pattern, showing signs of both strength and caution. The key indicators on the chart provide insight into the current trend, momentum, and possible future price action.
Moving Averages and Trend Direction
Two moving averages are present: the 50-day simple moving average (SMA) and the 200-day SMA. The 50-day SMA has been trending upward, crossing above the 200-day SMA in recent months, which is a bullish signal. This crossover suggests that momentum has shifted in favor of the buyers, and the stock has been in an uptrend.
However, the price is not far above the 200-day SMA, which means the overall trend is still developing. A decisive move higher with increasing volume would confirm a stronger trend, while a break back below the 200-day could signal a loss of momentum.
Volume and Market Participation
Volume levels have been relatively low in recent sessions, which indicates a lack of strong conviction from buyers or sellers. There were some notable volume spikes in mid-year, particularly during sharp price movements, showing that the stock does experience bursts of activity.
If the stock continues its upward trajectory, higher volume would be a key confirmation that investors are stepping in with more confidence. Conversely, if price pulls back and volume picks up, it could indicate distribution, meaning sellers are taking profits.
Recent Price Action and Candlestick Behavior
The most recent five trading sessions have shown small-bodied candles with relatively tight price ranges, suggesting consolidation. The upper wicks on a few of these candles indicate some selling pressure near the highs, which could be a sign of short-term resistance.
Support appears to be forming around the 50-day SMA, while the stock has struggled to push decisively above the recent highs. A strong close above these levels would be needed to continue the upward trend. If the price starts to roll over, a retest of the 200-day SMA could come into play as a key support level.
Relative Strength Index (RSI) and Momentum
The RSI indicator at the bottom of the chart shows that the stock is not overbought or oversold, sitting in a neutral range. This suggests that there is still room for price movement in either direction. If RSI moves closer to 70, it could indicate overbought conditions, meaning a pullback might be more likely. On the other hand, if RSI trends toward 30, it would suggest oversold conditions, which could provide a buying opportunity if other factors align.
Analyst Ratings
🔼 Upgrades
📈 In March 2024, analysts became more optimistic about NACCO Industries after the company showed a strong rebound in profitability. Recent earnings exceeded expectations, driven by effective cost management and improved operational efficiencies.
💰 Some analysts saw this as a turning point, considering the stock undervalued compared to its financial position. They revised their rating from hold to buy, believing that the market had not yet fully priced in NACCO’s improving fundamentals.
📊 The stock’s relatively low valuation metrics, combined with its ability to generate stable revenue in an uncertain economic environment, further reinforced the bullish sentiment among certain analysts.
🔽 Downgrades
📉 On the other hand, NACCO also received some downgrades, particularly in June 2024. Concerns arose over the company’s declining stock price, which had dropped roughly 7.71% over the past month.
⚠️ Analysts pointed to increasing competition and potential regulatory headwinds that could weigh on NACCO’s long-term growth. As a result, some firms downgraded their rating from buy to hold, suggesting a more cautious approach.
⛏️ The coal industry remains a highly regulated and politically sensitive sector, adding uncertainty to NACCO’s outlook. These concerns contributed to the more cautious sentiment from certain analysts who advised waiting for more clarity on regulatory trends before taking a bullish stance again.
🎯 Consensus Price Target
💵 The consensus price target for NACCO Industries is currently 38.79, reflecting analysts’ expectations for where the stock could trade over the next 12 months.
🔍 While this target suggests some potential upside from current levels, it is important to remember that price forecasts are based on various assumptions and can change as market conditions evolve. Investors should weigh both the bullish and bearish perspectives when making decisions on NACCO’s stock.
Earnings Report Summary
NACCO Industries wrapped up 2024 on a strong note, delivering a solid earnings report that showed significant improvement from the prior year. The company posted a net income of 7.6 million for the fourth quarter, bringing the full-year total to 33.7 million. That’s a major turnaround compared to the previous year, signaling stronger financial health and better execution across its business units.
One of the biggest highlights was the jump in adjusted EBITDA, which came in at 9 million for the quarter—a 27 percent increase year-over-year. For the full year, adjusted EBITDA more than doubled, hitting 59.4 million. That’s a clear sign that NACCO is running a tighter, more profitable operation.
Earnings per share (EPS) also told a positive story, coming in at 1.02 for the quarter and 4.58 for the year. Considering that last year’s results were in the red, this bounce-back is a welcome change for investors.
The coal mining segment was a standout performer, with adjusted EBITDA soaring more than four times higher than the prior year. A big driver of this success was increased demand from customers, particularly at the Falkirk mine. On top of that, insurance proceeds from business interruption at the Mississippi Lignite Mining Company provided an unexpected boost.
Meanwhile, the North American Mining segment also had a strong year, delivering a 35 percent jump in adjusted EBITDA. The business finished 2024 with an operating profit of 5.8 million, marking a 72 percent increase year-over-year. Strategic projects and improved operations played a big role in this growth, setting the stage for continued success moving forward.
Over in the Minerals Management segment, NACCO saw another 21 percent increase in adjusted EBITDA, thanks to smart management of existing mineral reserves and new exploration efforts. This division has been a steady contributor to the company’s overall performance and remains a key part of its long-term growth strategy.
Financially, NACCO looks stable with 73 million in cash on hand and 99.5 million in total debt. The company also rewarded shareholders by paying out 6.6 million in dividends and repurchasing 317,000 shares for 9.9 million during the year.
Looking ahead, management expects moderate profit growth in 2025. The coal mining segment should see steady demand, while North American Mining is projected to improve later in the year. Minerals Management is expected to stay on par with 2024. The company remains optimistic about a cash flow positive year, driven by stable energy demand and a supportive regulatory environment.
All in all, 2024 was a strong year for NACCO. With a focus on efficiency and growth across multiple business segments, the company seems well-positioned for another solid year ahead.
Financial Health and Stability
A strong balance sheet is the foundation of any sustainable dividend stock, and NACCO checks most of the right boxes.
✅ Solid Liquidity – The company’s current ratio of 4.08 suggests it has more than enough short-term assets to cover its liabilities.
🚀 Revenue Growth – Revenue has grown 24.1% year over year, which is a positive sign.
📉 Margin Pressures – Operating margin is negative at -18.13%, signaling potential cost issues.
⚖ Manageable Debt – Debt levels are reasonable, with a debt-to-equity ratio of 27.29%.
The biggest concern here is the declining operating margin, which could weigh on profitability if it continues. However, the company’s revenue growth and strong liquidity position help offset some of these worries.
Valuation and Stock Performance
How the Stock is Priced
NACCO looks undervalued based on several key valuation metrics:
- Price-to-Earnings (P/E) Ratio – 7.06 (suggests the stock is cheap compared to earnings)
- Price-to-Book (P/B) Ratio – 0.59 (trading well below book value)
- Enterprise Value/EBITDA – 4.32 (indicates fair valuation)
A P/B ratio below 1.0 is often a sign that a stock is trading at a discount relative to its assets. This could indicate an opportunity for value-focused investors.
Stock Performance Trends
Over the past year, NACCO’s stock has traded between $25.19 and $34.74. It’s currently sitting around $32.29, with its 50-day moving average at $31.54 and its 200-day moving average at $29.90. This suggests some positive momentum, as the stock is trading above its long-term trend.
With a beta of 0.94, the stock has slightly lower volatility than the overall market. For dividend investors, this is generally a good thing, as it means less dramatic price swings.
Risks and Considerations
Every investment comes with risks, and NACCO is no exception. Here are a few factors that investors should keep in mind:
⛏ Cyclical Industry – As a coal and natural resources company, NACCO’s earnings can be highly cyclical, which may impact dividend stability.
💲 Free Cash Flow Concerns – The company’s levered free cash flow is currently negative, which raises some red flags.
🌎 Regulatory Risks – Coal remains a heavily regulated industry, and increasing environmental restrictions could pose challenges.
📉 Profitability Pressures – Operating margin is currently negative, which could affect future earnings.
While NACCO has done a good job maintaining financial stability, these risks shouldn’t be ignored. Investors should keep an eye on future earnings reports and any signs of worsening cash flow trends.
Final Thoughts
For investors who prioritize dividend stability and financial strength, NACCO offers a compelling case. The company has a relatively low payout ratio, a strong balance sheet, and a track record of steady—if not rapid—dividend growth.
On the flip side, the company operates in a cyclical industry and has some concerns around profitability and cash flow. While the dividend looks safe for now, any prolonged weakness in earnings could limit future increases.
Ultimately, NACCO is best suited for investors who value steady, reliable income over high dividend growth. While it may not be the most exciting stock in the market, its conservative approach and undervaluation make it worth considering for income-focused portfolios.
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