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Potlatch (PCH) & Illinois Tool (ITW): Pros and Cons of Two Income Stocks

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Investing in dividend-paying stocks with growth characteristics has been a prudent strategy during this remarkable bull market, but it is always prudent to stay informed on specific developments. Today, Ryan McQueeney highlights Potlach (PCH - Free Report) and Illinois Tool Works (ITW - Free Report) , two stocks in the Income Investor portfolio with interesting stories to tell.

PotlachDeltic is a Real Estate Investment Trust (REIT) with the acres of timberland in Alabama, Arkansas, Idaho, Minnesota and Mississippi. The pressure has been on this stock as lumber prices have fallen and home construction has shown signs of stalling, but the firm delivered a solid earnings report last week and cooled some investor concern.

For its most recent quarter, Potlach beat earnings and revenue estimates. Earnings surged 39%, while revenue soared 64%. Lumber prices—despite recent volatility—were up 11% year over year, and lumber shipments increased 27%.

These strong results have helped usher in positive earnings estimate revisions, which has lifted the stock to a Zacks Rank #1 (Strong Buy). As Ryan explains, ongoing trends like falling lumber prices do create concerns, but so far, analysts are seeing the earnings picture for this company improve in the future.

Likewise, Illinois Tool Works is a stock that has performed sluggishly recently. Earlier hopes that a bipartisan infrastructure package would come to fruition have totally fizzled out, and the company recently posted a rare earnings miss.

However, as a means to reinvigorate investors, Illinois Tool announced a dividend hike and new share repurchase program. Ryan digs into this announcement and explains why investors might want to stick with ITW a little longer as the market reacts to this catalyst. ITW remains a Zacks Rank #3 (Hold).

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Potlatch Corporation (PCH) - free report >>

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