Favourable statistics for paper company Domtar Corp. has a Raymond James analyst floating the possibility of a dividend reinstatement later on this year.
Daryl Swetlishoff called Domtar a "compelling" free cash flow story, with an Outperform rating and $75 target price.
January statistics showed shipments up 3% year-over-year while overall demand was up 5.5%, while inventories were down 12% compared with the previous year.
"We expect incrementally tighter markets," he said in a note to clients.
He also expects the company to meet its core goal of reducing debt to $1-billion from $1.4-billion on $320-million in biofuel tax credits along with $40-million of asset sales.
As a result, there is the possibility of a suggested dividend reinstatement in the second half of 2010, with a $1 a share divdend implying a 2% yield at a cost of $43-million.