International Paper Co. (NYSE: IP – $58.29) reported third quarter adjusted per-share earnings of $1.08, two cents above the consensus as sales rose to $5.9 billion from $5.8 billion, matching Street estimates. Revenue was led by the company’s Cellulose Fibers, Industrial Packaging and Containerboard businesses, which offset weakness in Consumer Packaging. Earnings were boosted by price increases in key business segments and significantly lower maintenance outage costs, even as the business was hit by two hurricanes and record high recycled fiber costs. Looking ahead, the company is confident of continued strong demand across its Industrial Packaging division and the Global Cellulose Fibers business acquired from Weyerhaeuser in December of 2016. This demand, combined with prior price increases, should keep International Paper on track to deliver expected targeted earnings growth in 2017 of about $3.47 per share. The per share consensus estimate for 2018 is $4.33.
Shares of IP continue to hold appeal for patient aggressive and income accounts. The issue offers a high dividend yield of 3.2% and I believe it has above-average long-term capital gains potential through the beginning of the next decade.