We recently compiled a list of the 10 Best Dividend-Paying Stocks Under $50. In this article, we are going to take a look at where Nutrien Ltd. (NYSE:NTR) stands against the other dividend-paying stocks under $50.
The bullish market trend that had been ongoing since October 2022 faced a disruption in early August. Investor sentiment shifted as concerns about the U.S. economy’s strength grew. This change was triggered by a jobs report, which revealed modest job growth in July and a rise in the national unemployment rate. These figures sparked worries about potential economic challenges and doubts about whether the Federal Reserve had acted too slowly in implementing anticipated interest rate cuts that were expected to support the economy. As a result, stock markets saw sharp declines over several consecutive trading days. The broader market fell by 3% between August 2 and August 5.
According to analysts, despite the recent downturn in the market, there is no reason for equity investors to become overly cautious. The outlook remains positive, and it is still considered a favorable time to invest. For those holding cash, this period presents an opportunity to allocate capital to longer-term assets. Positive investment trends, particularly in AI but extending beyond it, offer ample opportunities for stock growth. Additionally, rising dividends provide another attractive element for investors to consider. Although dividend stocks have been underperforming relative to the broader market recently, they remain a popular choice due to their long-term returns. The Dividend Aristocrats Index has risen slightly over 6% this year, but the growth in dividends among US companies is promising. Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, forecasts a 6% increase in dividend payments for 2024, up from a 5.1% rise in 2023.
Also read: 10 Highest Paying Monthly Dividend Stocks
Dividend growth has been a trend this year, compared to the previous year. In the first and second quarters of 2024, dividends paid by US companies have grown significantly. According to Silverblatt, the significant takeaway from both quarters was the performance of large-cap companies. In April, Alphabet began paying a $9.3 billion dividend, joining other major dividend initiations in the first quarter, such as Bookings with $1.2 billion, Meta Platforms with $4.4 billion, and Salesforce with $1.5 billion. These initiatives contributed to 53% of the S&P 500’s year-to-date indicated dividend increase. Although gains without these new initiations were already setting a record for the broader market dividend payments in 2024, the additional forward cash commitments to dividends are expected to significantly boost payouts and prompt both investors and non-paying boards to reconsider their strategies.
Dividend stocks have historically made a substantial contribution to overall market returns. According to a Hartford Funds report, from 1940 to 2023, dividend income accounted for an average of 34% of the total market return. Analysts have long explored various dividend strategies to maximize investor returns. While high dividend yields have attracted considerable attention, dividend growth has proven to be a more reliable approach. However, recent research indicates that combining both yield and growth strategies can offer the greatest benefits. The High Dividend Growth Index, which tracks companies with the highest projected dividend yield growth in the broader market and a history of maintaining or increasing dividends for at least five years, has surged nearly 20% over the past year. This performance surpasses that of the Dividend Aristocrats Index, which focuses solely on dividend growth without considering yields.
Investors should thoroughly evaluate what suits their portfolio, as strategies that are effective at one time may not perform well in another. It’s crucial to consider the underlying fundamentals of a company when making investment decisions. In this article, we will take a look at some of the best dividend stocks under $50 according to analysts.
Our Methodology:
For this list, we screened for dividend stocks with share prices below $50, as of the close of August 16. From this group, we picked stocks with a projected upside potential of over 10% based on analyst price targets. We further narrowed down the list by including stocks that have dividend yields of at least 2%, as of August 16. The stocks are ranked in ascending order of their upside potential, as of August 16.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A close-up of a farmer’s hands sowing a field of organic grains with crop inputs.
Nutrien Ltd. (NYSE:NTR)
Upside Potential as of August 16: 27.90%
Share Price as of the close of August 16: $46.78
Nutrien Ltd. (NYSE:NTR) is a Canadian fertilizer and agriculture company. It is one of the largest producers of potash in the world. The company’s performance has declined primarily due to rising inflation, fluctuating commodity prices, and increased production costs. In the second quarter of 2024, the company reported revenue of $9.9 billion, which not only fell by 13% on a YoY basis but also missed analysts’ estimates by $817 million.
Despite these challenges, Nutrien Ltd. (NYSE:NTR) has demonstrated confidence in its operations throughout the quarter. The company experienced benefits from increased Retail margins, higher fertilizer sales volumes, and reduced operating costs during the first half of 2024. The demand for crop inputs remains robust, leading the company to raise its full-year forecast for global potash demand, supported by strong engagement across all major markets. Though the company has $13.37 billion in debt as of the most recent quarter with a debt-to-equity ratio of 0.53, it shouldn’t concern income investors because its cash generation is in place. In the second quarter of 2024, the company generated $1.8 billion in operating cash flow and paid $266 million to shareholders through dividends.
Nutrien Ltd. (NYSE:NTR) tops our list of the best dividend stocks under $50. It has increased its dividends for five years in a row. Currently, the company pays a quarterly dividend of $0.54 per share and has a dividend yield of 4.64%, as of August 16.
At the end of the second quarter of 2024, 35 hedge funds tracked by Insider Monkey held stakes in Nutrien Ltd. (NYSE:NTR), up from 33 in the previous quarter. These stakes are worth over $386.4 million in total. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q2.
Overall NTR ranks 1st on our list of the best dividend-paying stocks under $50. While we acknowledge the potential of NTR as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than NTR but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.