Dividend Investing Ideas Center
Have you ever wished for the safety of bonds, but the return potential...
Aaron Levitt Sep 04, 2019
The trade skirmish between the United States and China has hit the market hard in recent months. But no sector has suffered more from the trade war than agriculture stocks – thanks to new tariffs and dropping demand. The China/U.S. battle remains a significant point of contention for the sector. But you wouldn’t know that when looking at our Best Dividend Stocks List pick in the Ag industry.
Thanks to its massive size and scale, our pick is still making hay. As one of the largest processors and distributors of various agriculture products, our pick has managed to see rising profits, cash flows and sales – even with the various tariffs and trade issues. This has allowed it to pay its 351st consecutive quarterly dividend and upsize its stock buyback program. In the end, the firm’s scale and leadership position are paying serious dividends for investors in the struggling agriculture environment.
See the original article on our pick here.
But things could be looking better for our pick. That’s because the firm is looking to spin-out one of its most underperforming divisions in a separate company or explore a sale of the operations. Once a very profitable business, in recent years these operations have been a huge drag on earnings for our pick. By removing them from its umbrella, our pick should be able to instantly see rising cash flows and profits. Moreover, it’ll free our pick from some of the debt on its balance sheet. For investors, this separation could be a huge win over the long haul and help our firm navigate the current Ag environment even better.
In the end, the trade war has been rough for many agricultural stocks. However, thanks to our pick’s huge scale, it’s doing right by shareholders and still making some serious profits. If anything, the current environment has only made it a bargain for dividend seekers.
To summarize, here are five reasons why you should own this stock:
1. Huge moat of irreplaceable assets featuring over 750 different facilities and processing plants as well as numerous rail cars and trucking fleets.
2. Still making plenty of profits in the current Ag environment – thanks to scale and cost cutting/efficiency efforts.
3. Looking at spinning off declining assets to boost profitability and cash flows further.
4. Has increased its dividend for 43 years straight and more than doubled its payout since 2010. Recently upsized its buyback program as well.
5. Low payout ratio of 40.8% and healthy yield of 3.69%.
Our Best Dividend Stocks List has 20 of the highest-rated stocks by our proprietary rating system. Go Premium to find out the entire list.