DiscoverModern Value Investing with Sven Carlin5.2% Dividend Stock To Watch - Nutrien Stock
5.2% Dividend Stock To Watch - Nutrien Stock

5.2% Dividend Stock To Watch - Nutrien Stock

Update: 2020-11-03


Nutrien Dividend Stock Analysis - A stock to watch!
- Low cost potash producer with 6 million tonnes production ramp up option at extremely low cost and 50 years of production ahead - gives a margin of safety, also the high margins protect the dividend
- Integrated with retail after the merger with Agrium contributing $650 million in synergies - the retail segment is not as volatile as the fertilizer segment which gives also more stability to the dividend
- $2 billion cash flow at the bottom, or possible bottom, of the fertilizer cycle. Even if cash flows fall to just $1 billion, that is what they pay out for dividends, thus still some room left
- Good distributions to shareholders and sound balance sheet - strong buybacks and dividends from free cash flows
- Possible growth coming from potential higher fertilizer pricing but also from operations as the constantly invest for growth. This could be a long-term compounder and dividend growth stock. Don't expect the dividend to grow linearly because the business isn't such, but it can grow
- Potash is an oligopoly with 9 global players playing the prisoners dilemma game with China and India on pricing and production rates
- Global demand is likely to grow but production growth has also a lot of potential. However, expansion is not cheap
- The market is expecting lower for longer potash prices that would put pressure on the company and perhaps lower dividends
- The trend is for an increase in demand for potash over the long-term.
- Stock is at multi decade lows.
- To make it a great stock to buy, a low risk high reward one, the market cap needs to be around $12 billion! So, depending on your risk appetite, see whether it is a stock to buy or a stock to watch.

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5.2% Dividend Stock To Watch - Nutrien Stock

5.2% Dividend Stock To Watch - Nutrien Stock

Sven Carlin