Nutrien, a Canadian Dividend Champion, has seen its stock price decline by 23% over the past year, despite the company's strong performance and consistent dividend growth. This article explores the reasons behind the stock's decline and why it presents an attractive investment opportunity. The author argues that the temporary markdown is an opportunity to buy into a stable and essential business, with a focus on the company's role in the global fertilizer industry and its potential for future growth. The key points are:
- The author emphasizes the importance of separating temporary markdowns from businesses that are struggling. Nutrien, despite its stock decline, continues to earn billions and maintain a strong dividend payout.
- The article highlights the role of dividend growth and consistency, as Nutrien has increased its quarterly dividend to US$0.55, producing an annualized payout of approximately 3.4%. This makes it an attractive option for investors seeking regular income.
- Nutrien's business in the fertilizer industry is highlighted as essential, as crops require nutrients. The company's retail network and ability to sell crop inputs and services make it a key player in the market.
- The author acknowledges the potential risks, such as falling fertilizer prices, poor farm economics, and restructuring costs. However, they argue that the current decline provides an opportunity to buy into a stable business with a strong cash-flow outlook.
- The article concludes by suggesting that buying Nutrien stock gradually during a market correction could lead to significant growth through reinvestment, future dividend increases, and the next fertilizer recovery. The author encourages investors to consider this essential global business as a long-term investment opportunity.
