An often overlooked factor that keeps Mosaic Co (NYSE:MOS) successful is the fact that phosphates, not potash, account for the majority of its revenue ($1.7 billion of $2.7 billion in the fourth-quarter). Although phosphate margins aren’t nearly as high as that of potash, they are also much more stable. This is primarily why companies like Intrepid Potash have been squashed and why Mosaic could be an incredible bargain after the Uralkali announcement.
A step above his peers
Beyond just the financial outperformance of its peers, Prokopanko has done a fantastic job of rewarding shareholders, taking care of Mosaic Co (NYSE:MOS)’s own employees, and in giving back to the community.
Before 2011, Mosaic had never paid shareholders a dividend, nor had it been a particularly big advocate of share repurchase programs. That, however, has changed in a big way over the past two years. Earlier this year Mosaic Co (NYSE:MOS) noted its intention of enacting a share repurchase program, perhaps as large as $2 billion, in the latter half of this year. As a reminder, share buybacks don’t put cash directly in shareholders’ pockets, but they do have the effect of making a company appear cheaper on a P/E basis with fewer shares outstanding.
The big surprise has come in the dividend department, with Mosaic paying out its first quarterly dividend ever of $0.05 in August 2011. However, following just four quarters of paying dividends, it boosted its payout twice and now divvies out $0.25 per quarter, or quintuple what it was paying out just two short years ago for a current yield of 2.4%!
Working for one of the world’s largest crop nutrient companies also has its perks if you’re an employee. As you might expect, there are standard benefits like educational reimbursement and long-term disability. What’s unique about Mosaic Co (NYSE:MOS) are some of the optional benefits, which can include health, dental, and vision insurance that would extend to a spouse or a domestic partner, an employee bonus and profit-sharing plan, and the fact that many of its locations have onsite fitness centers.
Source: fishhawk, Flickr.
Mosaic is also doing its best to give back to the world that makes it so profitable. In 2012 Mosaic Co (NYSE:MOS) and its many global subsidiaries made a combined contribution of $23.6 million to support food, water, and local community investment programs. More recently, Mosaic donated $10,000 to 12 separate food banks in Florida for a grand total of $120,000, to demonstrate its ongoing commitment to reduce hunger domestically and abroad.
Two thumbs up
On paper, fertilizer companies make a lot of sense, given that the demand for food and higher crop yields is only going to increase as the population rises. In practice, though, the weather and supply issues can create havoc from time to time. With a well-diversified lineup of phosphate and potash fertilizer, a boatload of cash, and a dividend that’s grown by 500% in just two years, I see no reason Mosaic Co (NYSE:MOS) can’t succeed and why we shouldn’t be giving CEO James Prokopanko a good degree of credit for that success. He certainly deserves two thumbs up in my book!
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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