3 Agriculture Stocks Paying Long-Term Dividends

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Investors looking for dividend stocks tend to gravitate towards high-dividend stocks like consumer staples or utilities. One industry that may not immediately come to mind is agriculture stocks, some of which can be quite cyclical.

However, the rising global population is a major long-term growth catalyst for agriculture stocks. This article will take a look at three examples of agricultural companies with consistent business models and dividend growth.

Deere & Company (DE)

Deere & Company is the largest manufacturer of farm equipment in the world. The company also makes equipment used in construction, forestry & turf care, produces engines and provides financial solutions to its customers.

In mid-February, Deere reported (2/15/24) financial results for the first quarter of fiscal 2024. Sales slipped -4% over the prior year’s quarter as the benefit from strong demand for construction equipment was offset by a decrease in the sales of the Production & Precision Ag and Small Ag & Turf segments. Earnings-per-share dipped -5%, from $6.55 to $6.23, but exceeded the analysts’ consensus by $1.02.

Management stated that demand for products that help farmers produce more with lower efforts remains strong. However, the last two quarters have marked a sharp deceleration over the previous quarters.

There are many factors that could fuel growth for Deere. Long-term global economic growth and share buybacks could add to the growth thesis. The company could also ramp up buybacks in the future. Deere has also been growing its presence in the higher-growth construction machinery market, both organically as well as via acquisitions.

DE has a secure dividend. The payout ratio is approximately 21% for fiscal year 2024. DE stock currently yields 1.6%.

Lindsay Corporation (LNN)

Lindsay Corporation provides water management and road infrastructure services in the United States and internationally. The business’s irrigation segment provides irrigation solutions for farmers and contributes over 80% of sales, and the infrastructure segment helps with road and bridge repairs and contributed the other 14%. Lindsay enjoyed a record-breaking FY2023 as both business segments flourished.

On January 4th, 2024, Lindsay reported Q1 FY2024 results for the period ending November 30th, 2023. The business saw diluted earnings-per-share of $1.36, which topped analyst estimates. Revenues declined 8% year-over-year to $161 million. The revenue decline was due to a drop in irrigation demand as the company was up against a very strong comparable quarter from last year when grain prices were far higher.

Both irrigation and infrastructure benefit from government support payments. Last year’s Infrastructure Investments and Jobs Act (IIJA) marks the largest federal investment into infrastructure projects in more than a decade and should boost Lindsay’s infrastructure business.

Over the past five years, dividend payments have grown at 2.5% annually, and over the past 10 years, dividends have grown at 4.5% annually. The company announced its latest dividend increase on July 7th, 2023, giving investors a 2.9% increase.

Lindsay has averaged a payout ratio of 41% over the past 10 years. It is far below that today. We project that the dividend will be safe since the low payout ratio signifies that the dividend is well-covered from earnings. LNN currently yields 1.2%.

FMC Corp. (FMC)

FMC Corporation is an agricultural sciences company that provides crop protection, plant health, and professional pest and turf management products. Through acquisitions, FMC is now one of the five largest patented crop chemical companies. The company markets its products through its own sales organization and through alliance partners, independent distributors, and sales representatives. It operates in North America, Latin America, Europe, the Middle East, Africa, and Asia.

On February 6th, 2024, FMC released fourth quarter and full year 2023 results for the period ending December 31st, 2023. For the quarter, the company reported revenue of $1.15 billion, down 29% versus the fourth quarter of 2022, and adjusted earnings per diluted share of $1.07, down 55% versus the same quarter previous year. Quarterly revenue was predominantly driven by a 25% decrease in volume and a 5% decline from price increases in North America, EMEA, and Asia, offset by a 1% foreign exchange effects.

FMC’s management forecasts full-year 2024 revenues between $4.50 billion and $4.70 billion, indicating a 2.5% increase at the midpoint compared to 2023, mainly fueled by new product growth in the second half. Adjusted EBITDA is set to be $900 million to $1.05 billion, remaining stable year-over-year. Adjusted EPS is expected to range from $3.23 to $4.41, with a slight increase of 1% at the midpoint. Lastly, free cash flow is anticipated to see a substantial rise, aiming for $400 to $600 million.

FMC stock currently yields 4.3%.

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Disclaimer: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of Sure ...

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