Now that lumber prices are showing signs of easing, let us look at five lumber stocks that could prove to be beneficial to your portfolio. UFP Industries (NASDAQ:UFP), West Fraser Timber Co. (NYSE:WFG) (TSE:WFG), Louisiana-Pacific Corporation (NYSE:LPX), Resolute Forest Products (NYSE:RFP) (TSE:RFP), and Weyerhaeuser (NYSE:WY) are five companies that have reasonable upside potential and pay regular dividends.
Lumber prices have fallen to their pre-COVID-19 levels recently, fueled by the rising interest rate scenario, which is dragging down construction. Notably, Lumber futures are trading nearly 70% below their March highs and significantly below the year-ago period levels. Specifically, two-by-four prices have declined to prices hovering near the pre-pandemic levels.
The COVID-19 pandemic triggered a huge demand for home refurbishing as well as bolstered demand for suburban homes. During that period, lumber prices had surged to about triple their pre-pandemic levels, signaling an incoming inflationary environment. Also, supply chain snarls and the Russia-Ukraine war have propelled the cost of commodities this year.
UFP Industries (NASDAQ:UFP)
Michigan-based UFP Industries supplies lumber to the manufactured housing industry in three segments; Retail, Construction, and Industrial. The company has operations in North America as well as internationally. Year to date, UFPI stock has lost 23.5%.
Notably, UFP Industries stock pays a regular quarterly common dividend of $0.25 per share, implying a current dividend yield of 1.29%.
What is UFPI’s Price Target?
With three unanimous Buys, UFPI stock has a Strong Buy consensus rating. The average UFP Industries price target of $105 implies an impressive 52.8% upside potential to current levels.
West Fraser Timber Co. (NYSE:WFG) (TSE:WFG)
Vancouver, Canada-based West Fraser Timber produces lumber, wood chips, plywood, pulp, and newsprint. WFG stock has lost nearly 25% year to date. Notably, WFG pays a regular quarterly common dividend of $0.28 per share, reflecting a current dividend yield of 1.34%.
Is WFG a Buy or Sell?
On TipRanks, West Fraser Timber stock commands a Strong Buy consensus rating based on four Buys. The average West Fraser Timber price forecast of $108.92 implies a whopping 55.5% upside potential to current levels.
Louisiana-Pacific Corporation (NYSE:LPX)
Nashville, Tennessee-based Louisiana-Pacific is an American building materials manufacturer offering oriented strand board (OSB) panels and engineered wood products. LPX stock has lost 36.3% so far this year.
The Louisiana-Pacific stock also pays a regular quarterly common dividend of $0.22 per share, representing a current dividend yield of 1.69%.
Is LPX Stock a Buy?
On TipRanks, LPX stock has a Moderate Buy consensus rating. This is based on three Buys, one Hold, and one Sell. The average Louisiana-Pacific price target of $69.20 implies 40.6% upside potential to current levels.
Resolute Forest Products (NYSE:RFP) (TSE:RFP)
Resolute Forest Products owns and operates pulp & paper mills, and wood products facilities located in the United States, Canada, and South Korea. The Montreal, Canada-based company also produces lumber and other wood products for the residential construction and home-renovation markets.
Is RFP Stock a Buy, Sell, or Hold?
RFP stock has a Moderate Buy consensus rating on TipRanks. This is based on one Buy versus two Holds. The average Resolute Forest Products price target of $22.17 implies 10.7% upside potential to current levels, despite gaining a whopping 36.8% so far this year.
Weyerhaeuser is one of the world’s largest owners of timberland. The company produces forest products, including wood products. WY stock has lost 27.9% so far this year.
Interestingly, WY boasts a current dividend yield of 2.41% and pays a regular quarterly common dividend of $0.18 per share.
Is Weyerhaeuser a Buy?
Weyerhaeuser stock has a Moderate Buy consensus rating on TipRanks. This is based on four Buys and three Holds. The average Weyerhaeuser price forecast of $41.20 implies 48.2% upside potential to current levels.