One of the commodities companies I’ve touted for a long time as a great portfolio staple has been Nutrien Inc. (TSX:NTR)(NYSE:NTR). This global leader in the production of potash and other fertilizer products has largely underperformed in recent years on concerns around an over-supplied fertilizer market with supply and demand fundamentals that have gone out of whack.
I do think these concerns are material. I would caution investors on adding an entire position all at once or going too heavy with a position in a company like Nutrien. That said, I do see a number of factors as being very bullish for the potash sector and believe we could be seeing a rebound materializing now. There has been a rapid recovery in corn prices, a key indicator for agricultural inputs. Various Covid-related production slowdowns have also been beneficial.
Nutrien is on the lower end of the cost curve and is a swing producer in most fertilizer inputs giving the company some pricing power. The Agrium side of the business (its farm retailing business) has also done quite well. These fundamental drivers help to support a solid dividend yield of 5.5% at the time of writing, a great starting dividend yield for a young investor. Given the stability of Nutrien’s cash flows and its overall position in this stable sector, I think Nutrien stock is one of the best long-term dividend options for investors today.
Invest wisely, my friends.