Below we present the list of 5 Best Materials Dividend Stocks To Buy Now. For our methodology and a more comprehensive list please see the 11 Best Materials Dividend Stocks To Buy Now.
5. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Shareholders: 29
Dividend Yield: 4.09%
Chilean chemicals and fertilizers company Sociedad Química y Minera de Chile S.A. (NYSE:SQM) has greatly increased its dividend payments over the last year, vaulting it up the list of best materials dividend stocks. In the last two quarters alone, the company has paid out nearly $4.45 in dividends, more than it had paid out in the prior three years combined.
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) grew revenue by 342% in the second quarter of this year, to $2.6 billion, while net income and EPS both skyrocketed by more than 800% year-over-year. The company’s lithium segment continued to be a massive growth driver in Q2, growing sales by more than 1,000% to $1.85 billion. Given the tightness in the lithium and fertilizer markets and the extended long-term growth runway for lithium, SQM is a compelling growth and dividend stock rolled into one.
Smart money ownership of Sociedad Química y Minera de Chile S.A. (NYSE:SQM) hit an all-time high in Q1 and ticked up even further in Q2, having doubled since the end of 2020. Several quant funds, which appear to have been big fans of materials stocks during Q2, were buying up SQM during the quarter, including Two Sigma Advisors, Renaissance Technologies, and Arrowstreet Capital.
4. LyondellBasell Industries N.V. (NYSE:LYB)
Number of Hedge Fund Shareholders: 37
Dividend Yield: 5.34%
Chemicals company LyondellBasell Industries N.V. (NYSE:LYB) has an eight-year streak of raising its annual dividend payouts, giving it one of the best track records in the materials sector, which is typically fraught with cyclicality. In addition to raising its quarterly dividend payments by 5.3% in June, the company also paid out a hefty special dividend of $5.20 on June 13 in recognition of its record levels of cash generation in 2021.
While LyondellBasell Industries N.V. (NYSE:LYB)’s short-term results will be pressured by weakening demand and rising prices for natural gas (which is a key input for its plastics production), the company’s shares look like a great value proposition at the moment, trading at just 6.88x earnings. And the company’s dividend doesn’t appear to be at risk in any way, regardless of near-term headwinds, as LyondellBasell’s payout ratio is well below 40%.
The number of smart money managers long LyondellBasell Industries N.V. (NYSE:LYB) has trended down over the past five quarters after jumping by 78% in the first quarter of 2021. Two Sigma Advisors and Arrowstreet Capital added LYB to their 13F portfolios during Q2, while Steve Cohen’s Point72 Asset Management sold out of his position.
3. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Shareholders: 40
Dividend Yield: 2.43%
Barrick Gold Corporation (NYSE:GOLD) began making dual quarterly dividend payments last year, which includes a performance-based payout each quarter. The company raised its quarterly payouts to $0.10 at the beginning of this year, in addition to a $0.10 performance bonus in each of the first three quarters, which dipped to $0.05 for the fourth quarter. With gold prices expected to rise as much as 10% in 2023, the company is well positioned to continue paying out an attractive dividend. Barrick Gold pulled in $2.53 billion in revenue and $0.13 in non-GAAP EPS in Q3, both of which beat estimates.
Hedge fund ownership of Barrick Gold Corporation (NYSE:GOLD) peaked in the first quarter of 2020 at the height of pandemic fears, but has trended down since, falling by 26%. First Eagle Investment Management held the largest position in GOLD on June 30, owning over 26.6 million shares worth $471 million.
The ClearBridge Investments International Growth EAFE Strategy likes the work Barrick Gold Corporation (NYSE:GOLD) has done to delever its balance sheet and return more money to shareholders, as the fund discussed in its Q1 2022 investor letter:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
2. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Shareholders: 45
Dividend Yield: 5.27%
Dow Inc. (NYSE:DOW), which provides packaging, plastics, and specialty coatings, among other products, has maintained a $0.70 quarterly dividend since being split off from DuPont de Nemours, Inc. (NYSE:DD) in 2019. While the dividend hasn’t grown at all in over three years as the company instead focuses on paying down its debt, it nonetheless boasts two of the most attractive components of a good dividend, which are a nice yield (over 5%) and a low payout ratio (less than 50%).
Dow Inc. (NYSE:DOW) shares have slumped this year as oil and gas prices have risen, which raise the costs associated with Dow’s many manufacturing processes. There is likewise some concern that demand for the company’s products will slump considerably during a recession, though management has stated that packaging and plastics volumes only decline by about 2% to 3% during lean economic periods. In the first half of this year, Dow’s free cash flow grew to $2.7 billion, up from $2.1 billion during the year-ago period.
Hedge fund ownership of Dow Inc. (NYSE:DOW) has remained relatively steady over the past two years, with the number of funds holding DOW in their 13F portfolios never falling below 39 or topping 47 during that time. Richard S. Pzena’s Pzena Investment Management added to its already sizable DOW holding during Q3, raising by 20% to 7.51 million shares worth $330 million.
1. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Shareholders: 56
Dividend Yield: 4.73%
Topping the list of best materials dividend stocks to buy now is Newmont Corporation (NYSE:NEM), which has raised its dividend by a hefty CAGR of 57.8% over the past five years. Its quarterly payouts now amount to $0.55, up from an average of just $0.0625 in 2017. The company’s payout ratio is now hovering around 100% however as it’s become significantly more expensive for the company to mine for gold in recent quarters.
Newmont Corporation (NYSE:NEM) adjusted EPS of $0.27 in the third quarter was only a little more than half what analysts were expecting, while its sales of $2.63 billion were down from $2.9 billion last year. In the second quarter, Newmont’s cost per ounce jumped by 23% due to intensifying energy and labor costs. However, the company doesn’t anticipate costs rising any higher, and they should be offset partially by rising gold prices over the coming year. Boasting a good portfolio of assets and a strong commitment to returning money to shareholders, Newmont is a materials dividend stock that should be on the radars of all dividend investors.
Newmont Corporation (NYSE:NEM) is the most popular materials dividend stock among hedge funds, having hit an all-time high in ownership among smart money managers during Q2. There’s been a 23% rise in the number of funds long NEM in 2022. Rajiv Jain’s GQG Partners owned 34.8 million shares of Newmont on June 30 worth $2.08 billion. The company accounted for a 5.09% stake in the fund’s 13F portfolio and ranked as its fifth-largest holding.
For more of the latest stock picks worth considering for your portfolio, check out 15 Best NASDAQ Dividend Stocks To Buy and 15 Biggest Gas Companies in the World.
Disclosure: None.
