Small, sum-of-the parts story NL Industries (NL) quietly did it again last week. By that I mean the diversified maker of engineered parts once again raised its dividend, this time by 16.7%, from six cents a share to seven cents. That equates to a 4.1% indicated yield. It was around this time last year that NL doubled the dividend to six cents a share.
NL can afford to raise the dividend as of its latest quarter-end the company had $142 million, or $2.91 per share, in cash on its balance sheet. In addition, NL owns pieces of three publicly traded companies, including 1.2 million shares of Valhi Inc. (VHI) valued at about $30 million, 30% of Kronos Worldwide (KRO) valued at $509 million, and 86% of CompX International (CIX) valued at $242 million. NL's current market cap is just $336 million, while its interests in VHI, KRO and CIX total $875 million. The thing that complicates matters for NL is the specter of litigation that goes back to the days when NL was known by its former name, National Lead.
Meanwhile, there is a potentially interesting situation with higher-end grill maker Weber Inc. (WEBR) . Some of my position is loaned out through a securities lending program, presumably borrowed by bearish investors in order to short the shares. I've been noticing that the lending rate continues to increase. Last week, it went from 19.5% to 21%. Just two weeks ago, the lending rate was 14%; in early February it was 12.5%. The bears are paying a hefty price to short WEBR, the current short interest ratio of which is 32.3%.
The last time I saw lending rates this high was with GameStop (GME) , which was a member of my 2019 Tax Loss Selling Recovery Portfolio. The highest lending rate I saw in that situation was 19% in late September 2020. However, keep in mind that along with the other names in my annual Tax Loss Selling Portfolio, I closed that position in early November before all the fun started with GME.
I am not equating the Weber story with what happened to GameStop, but it seems there's quite a bearish bet on WEBR and short sellers are willing to pay a fairly high price to borrow shares. This could be fun (or painful) to watch.