In the 1950s, Keith Tantlinger essentially reinvented the box. He added corner locks to the metal boxes used for shipping, so they could be attached to one another. And he reinforced their frames and standardized sizes, allowing the containers to be picked up by cranes and stacked.

It’s now estimated that 90 percent of all non-bulk cargo–anything other than commodities such as crude oil and grain–is moved by “intermodal” containers, which can be transferred from truck to ship to train and back to truck again before reaching their destinations.

But purchasing and storing shipping containers can be costly, particularly since volumes can be unpredictable due to seasonal factors and the economy. Enter container- leasing companies, such as TAL International Group (NYSE: TAL), which we think is poised for further gains, and sports a 5.7 percent dividend yield.

Despite sluggish US economic growth, trade volumes are on the rise. For example, at California’s Port of Long Beach—one of the country’s busiest—inbound traffic (in terms of 20-foot equivalent units, or TEUs) rose by more than 18 percent in 2012, while outbound traffic was up 14 percent. At the same time, the number of empty containers at the port declined by about 2 percent.

The global supply of shipping containers has been tightening, helped along by what amounted to a virtual standstill in new container production during 2008-09, at the height of the global financial crisis. As a result, the supply of containers has failed to keep up with demand, even as extra-large container ships that can carry as many as 20,000 TEUs are preparing to launch over the next few years.

TAL Metrics

As the world’s fourth-largest container-leasing company, TAL is well positioned to benefit from rising trade volume. It has 12 percent market share globally and owns about 17 percent of the container supply. The analyst consensus is for earnings to come in at $3.83 per share for 2012, and $4.10 per share for 2013.

TAL has depots on both US coasts and throughout Europe, as well as at key ports in Brazil, Australia, India and the rest of Asia. As a result of that broad footprint and a tight market, TAL regularly achieves a utilization rate of at least 98 percent, meaning that nearly all its assets are generating revenue. TAL also has low operating costs; most operations are handled by relatively few employees relying on sophisticated databases.

A high utilization rate and low cost structure mean that more than half of TAL’s annual revenue typically translates into free cash flow. This, in turn, funds the company’s 62-cent quarterly dividend.

Although TAL’s shares started to rise in November 2012 and are up about 33 percent since then, they still offer a compelling value at just over 11 times trailing earnings. And we anticipate further upward momentum in the coming year.

Debt-fueled growth. But while the container-leasing business is a cash cow, TAL borrows heavily, so it exposes investors to a high level of interest rate risk. Recently, TAL had 4.4 times more debt than equity, and it uses interest rate swaps to hedge its borrowing risk. So TAL will take a hit if debt markets freeze up, as they did in 2008, or if there’s a sudden upward move in interest rates.

That said, with interest rates likely to stay low for at least another year, and the prospect of global economic growth through 2014, TAL International Group should be able to do business as usual for some time to come.