In this article, we will take a detailed look at the 12 Best Materials Dividend Stocks To Buy Now. To see more such stocks, click 5 Best Materials Dividend Stocks To Buy Now.
Dividend stocks weren’t as impressive in 2023 as they were last year, but constant uncertainty in the market and investors’ hunger for stability and hedging against risks always keep dividend equities relevant. In 2023, the AI-fueled rally that increased investors’ risk appetite, along with attractive returns from treasuries and money market funds, dampened the lure of dividend stocks. But the coming year would be fraught with risks and recession fears as many believe we are in for a long period of elevated inflation and rates. In this environment, investing in companies that pay, and also raise, their dividends consistently and have stable fundamentals are among the most attractive investment options.
Ignoring short-term ups and down, dividend-paying companies, especially those that regularly increase their payouts, have a solid track record. From 1985 through the end of 2022, dividend growers in the Russell 1000 index outperformed the broader benchmark and showed lower volatility when compared to other stocks, according to a report by T. Rowe Price.
Data showed the economy is slowing down along with a declining consumer sentiment, driven by consistent rate hikes. Economist expects a very slow rebound in the broader economy to begin in the second half of 2024, fueled by slow rate cuts. A rebound in manufacturing activity is also expected to favor basic materials sector in the years to come.
Charles Schwab in its 2024 outlook report said:
The big picture we see for 2024 is of a shallow U-shaped recovery in global economic and earnings growth, rather than the V-shape seen in the last two global recessions of 2008-09 and 2020. If in 2023 the global economy experienced a soft landing with growth for much of the Group of Seven countries (Canada, France, Germany, Italy, Japan, United States, and United Kingdom) stalling but not contracting much, then it’s also likely that a soft recovery gets slowly underway during 2024, with growth rebounding only modestly (and unevenly) throughout the year. Global stocks may react with heightened volatility to the seemingly chaotic data points as parts of the global economy move in different directions, with a broader stabilization and recovery only visible over time. Patient investors in global stocks with an eye on the big picture may benefit despite an uneven path higher should markets discount better growth ahead supported by rate cuts among major central banks.
Photo by Annie Spratt on Unsplash
Methodology
For this article we first used a stock screener to identify dividend-paying stocks in the basic materials sector. From the resultant dataset, we picked 12 stocks with the highest number of hedge fund investors.
12. DuPont De Nemours Inc. (NYSE:DD)
Number of Hedge Funds: 38
With a dividend yield of 2.03% as of December 6, DuPont De Nemours Inc. (NYSE:DD) is a top materials stock to buy for dividends according to hedge funds. In November, UBS issued a list of highest conviction tactical thematic stock ideas. The firm believes these stocks are positioned well to gain in the next six to 24 months.
DuPont De Nemours Inc. (NYSE:DD) was one of these stocks.
As of the end of the third quarter of 2023, 38 hedge funds tracked by Insider Monkey reported having stakes in DuPont De Nemours Inc. (NYSE:DD). The biggest hedge fund stakeholder of DuPont De Nemours Inc. (NYSE:DD) was Dan Loeb’s Third Point which owns a $310 million stake in DuPont De Nemours Inc. (NYSE:DD).
11. Agnico Eagle Mines Ltd (NYSE:AEM)
Number of Hedge Funds: 38
Canadian-based gold company Agnico Eagle Mines Ltd (NYSE:AEM) has a dividend yield of over 3% as of December 6. In October, Agnico Eagle Mines Ltd (NYSE:AEM) posted Q3 results. Adjusted EPS in the period came in at $0.44, beating estimates by $0.02. Revenue in the quarter increased by 13.1% year over year to $1.64 billion, meeting estimates.
Insider Monkey’s database of 910 hedge funds shows that 38 funds had stakes in Agnico Eagle Mines Ltd (NYSE:AEM) as of the end of September 2023.
10. International Flavors & Fragrances Inc (NYSE:IFF)
Number of Hedge Funds: 38
With a dividend yield of 4.30%, International Flavors & Fragrances Inc (NYSE:IFF) is one of the best materials dividend stocks to buy now according to hedge funds.
Insider Monkey’s proprietary database of 910 hedge funds shows that 38 hedge funds had stakes in International Flavors & Fragrances Inc (NYSE:IFF). The biggest stakeholder of International Flavors & Fragrances Inc (NYSE:IFF) was Scott Ferguson’s Sachem Head Capital which owns a $595 million stake in International Flavors & Fragrances Inc (NYSE:IFF).
International Flavors & Fragrances Inc (NYSE:IFF) talked about its guidance and business expectations during its Q3 earnings call:
On the bottom line, we are now expecting to deliver full year 2023 adjusted operating EBITDA at the mid to high end of our previously announced guidance of $1.85 billion to $2 billion, driven primarily by favorable price to inflation and improved productivity. We also now expect full year interest expense to be slightly higher at approximately $450 million. Our projected effective tax rate for the year is expected to be approximately 21%, the same estimate we provided last quarter. Finally, as we look to the fourth quarter, we continue to expect an improving trend in the majority of our businesses as we navigate the macroeconomic challenges impacting our industry. We are seeing signs of green shoots in the fourth quarter, with stabilization improvements across several parts of our business.
As we near the end of the year, I know many of you have questions on 2024. While the macroeconomic environment remains volatile with low visibility, we are optimistic heading into the new year. We have several known one-off items that we have high level of confidence will be tailwinds, including significant negative absorption related to our successful inventory reduction program and onetime Locust Bean Kernel inventory write-down.
Read the full earnings call transcript here.
9. Dow Inc. (NYSE:DOW)
Number of Hedge Funds: 39
Chemicals company Dow Inc. (NYSE:DOW) posted Q3 results in October. Adjusted EPS in the quarter came in at $0.48, beating estimates by $0.03. Revenue in the quarter fell 23.9% year over year to $10.73 billion, beating estimates by $320 million.
Dow Inc. (NYSE:DOW) talked about its guidance in Q3 earnings call:
We expect the challenging macroeconomic dynamics to continue through the fourth quarter, including sluggish industrial activity. Global Manufacturing PMI has declined for the 13 consecutive month in September. It also includes weak demand in Europe and a slower-than-expected recovery in China. While inflation continues to moderate, it remains at elevated levels, resulting in a continuation of a tighter monetary policy. In the U.S., we’re seeing some mixed indicators as September manufacturing PMI improved to 49.8. Retail sales growth remains positive, while consumer confidence has declined for the last two months. In Europe, industrial and consumer demand remains weak despite sharply lower inflation.
PMI has contracted for 15 consecutive months through September, and consumer confidence remains low. With that said, automotive demand is showing signs of resilience. In China, while manufacturing PMI remained in expansionary territory in September, China exports fell for the fifth straight month. Automotive sales and production are a bright spot, rising in August, both sequentially and over the prior year in September. Around the rest of the world, India’s manufacturing PMI remains expansionary, while in Mexico, industrial production rose for more than 20 months in August. However, ASEAN manufacturing PMI contracted for the first time in two years in September. Against this macroeconomic backdrop, we will continue to take a disciplined approach to managing our operations while leveraging our diverse global portfolio and our cost-advantaged assets.
Read the full earnings call transcript here.
8. Coreteva Inc (NYSE:CTVA)
Number of Hedge Funds: 42
Agricultural chemicals and seed company Corteva Inc (NYSE:CTVA) ranks 8th in our list of the best materials dividend stocks to buy now according to hedge funds. In November, Corteva Inc (NYSE:CTVA) posted Q3 results. Adjusted EPS in the period came in at -$0.23, beating estimates by $0.03. Revenue in the quarter came in at $2.59 billion, missing estimates by $82.96 million.
As of the end of the third quarter of 2023, 42 hedge funds tracked by Insider Monkey reported owning stakes in Corteva Inc (NYSE:CTVA). The biggest stakeholder of Corteva Inc (NYSE:CTVA) was Natixis Global Asset Management’s Harris Associates which owns a $246 million stake in the company.
Oakmark Fund made the following comment about Corteva, Inc. (NYSE:CTVA) in its Q3 2023 investor letter:
“Corteva, Inc. (NYSE:CTVA) is a leading provider of seed and crop protection chemicals. We believe the seed and crop protection markets have sizeable barriers to entry due to the duration and magnitude of investment required to compete. Both industries require constant innovation: Farmers expect seed yield improvement each year while nature develops immunity to crop protection chemicals over time. As a result, advantages accrue to the largest players with the most R&D resources. Within this context, we believe Corteva is very well positioned. The company has scale, well-recognized brands, a loyal customer base, and a promising R&D pipeline. In addition, we see idiosyncratic opportunities for Corteva to improve its profitability over time, and we believe the current management team is executing well against this opportunity. More recently, the stock has been pressured by near-term headwinds related to inventory destocking and declining crop prices. We see this weakness as an opportunity to invest in a high-quality and defensible business at a discount to both its own historical trading multiple and private market transactions.”
7. Air Products and Chemicals Inc (NYSE:APD)
Number of Hedge Funds: 43
With over four decades of consistent dividend increases, Air Products and Chemicals Inc (NYSE:APD) is one of the best materials dividend stocks to buy now according to smart money investors. Last month Air Products and Chemicals Inc (NYSE:APD) posted fiscal Q4 results. Adjusted EPS in the quarter came in at $3.15, beating estimates by $0.04.
Insider Monkey’s database of 910 hedge funds shows that 43 hedge funds had stakes in Air Products and Chemicals Inc (NYSE:APD).
6. CRH Plc (NYSE:CRH)
Number of Hedge Funds: 48
Building materials company CRH Plc (NYSE:CRH) is a high dividend yield stock in our list of the best materials dividend stocks to buy according to hedge funds. The stock has a dividend yield of 6.85% as of December 6. Last month CRH Plc (NYSE:CRH) said it will acquire a portfolio of cement and ready mixed concrete assets in Texas from Martin Marietta Materials for $2.1 billion.
A total of 48 hedge funds out of the 910 hedge funds tracked by Insider Monkey had stakes in CRH Plc (NYSE:CRH).
Here is what Voss Capital has to say about CRH plc (NYSE:CRH) in its Q3 2023 investor letter:
“While the market has recently been focused on GPU chips and AI scripts, our attention has been on cement blocks and crushed rocks. We’ve enthusiastically made CRH one of our largest positions ever at cost due to its limited downside. CRH is among the largest aggregates and infrastructure companies in the United States and Europe and has recently relisted to the NYSE from the LSE, which we believe will be a catalyst for the stock to rerate upwards towards peer valuations as its undeniable value hiding in plain sight becomes more widely discussed.
In 1970, Cement Limited and Roadstone Limited, two Irish infrastructure-focused companies, combined to form Cement and Roadstone Holdings, or “CRH.” An investment of $1 million into CRH upon its founding since that fateful merger ~53 years ago would have turned into ~$1.5 billion by mid-year 2023, an annualized total return to investors of 15.0%, a high rate of compounding we think can continue.
Half a century of success at CRH has been driven by disciplined operations and capital allocation that we believe derives from a company culture built around appropriate financial incentives. CRH’s M&A playbook has proven to be successful as an acquisitive company like CRH can’t compound at a rate of 15% over 50 years unless acquisitions and divestitures have been executed at attractive prices. Over the last five years, CRH has spent $10.3 billion on acquisitions while receiving $10.5 billion in proceeds from divestitures across dozens of transactions, with the average acquisition multiple ranging from 7x – 8x EBITDA depending on the year and the average exit multiple clocking in at 11x EBITDA.”
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Disclosure. None. 12 Best Materials Dividend Stocks To Buy Now was initially published on Insider Monkey.
