It’s a top dividend stock today. It’s a great business. And it will continue to profit on a powerful trend.
The Powerful Trend
Food consumption is climbing.
The average American consumed 155 pounds of flour and cereal in 1950. By 2000, average consumption hit 200 pounds.
In those 50 years, meat consumption grew 41%. This growth also drives demand for grains. It can take over 10 pounds of grain to produce a pound of beef.
As farms improve yield, Americans eat more food… and so does the rest of the world.
The world’s population is 7.3 billion people. The United Nations projects it will almost hit 10 billion by 2050. There will be more mouths to feed.
The rise in world population and food consumption is pushing trillions of dollars to agriculture businesses.
The company I’m recommending today is one of the world’s top agricultural processors. It provides food and a better life for millions of people around the world.
A Top Dividend Stock
Archer Daniels Midland (ADM) is a top dividend stock. That’s what initially caught my attention.
It’s a dividend aristocrat. One of about 50 companies that has raised its dividend for at least 20 years.
But the company goes even further. It’s raised its dividend for 40 years.
The chart below shows annual dividend growth just over the last 10 years.
It keeps paying shareholders more. And I expect this to continue.
Archer Daniels Midland’s payout ratio is only 38%. This means that for every $1 in income, it pays investors $0.38. If income doesn’t rise, there is still room to raise the dividend.
But I expect both sales and income to increase over the next ten years.
Archer Daniels Midland has a great business. It’s shareholder friendly. And it’s trading at a CHEAP value today.
- The yield is above 3%. That’s above the 10-year treasury rate. And to be honest, I’ll feel safer owning ADM over government debt.
- The EV/EBITDA is under 10. That’s below the S&P 500 average. It’s a bargain for a great business.
With any business, price is what you pay and value is what you get.
I’ve valued ADM at $48.63 per share with my proprietary system. And ADM shares recently traded at $39.94. It’s a good buy today.
ADM shares are up about 30% from their lows at the start of the year. Still, I plan on adding ADM to my core portfolio in the near future. I suggest you do the same. It’s a top dividend stock to hold for decades.
I don’t have a crystal ball. No trader does. That’s why I buy great businesses trading at cheap values. ADM might drop 10% after I buy. But I’d still hold… I might even double down. Timing the market in the short-run is a fool’s game.
Never put more than 5% of your portfolio in one position. I can’t stress this enough. Warren Buffett has said “diversification is protection against ignorance.” And it’s true… But it’s still crucial that you use smart diversification. Find out why here.