The world’s population continues to grow as does the
need to feed people. This fact is real
no matter what the Federal Reserve’s policy on borrowing is or how dysfunctional
our Congress is. Economies can grow and
contract, but the need to feed an ever growing population is permanent.
Growing food requires fertilizer.
Con Agra (CAG) and DuPont (DD) were part of my
portfolio until recently. CAG’s stock
price increased and forced me to set a stop.
When CAG weakened, the stop was hit.
DuPont (DD) and Dow Chemical (DOW) did not perform quite as poorly. I lost my position in each of these two
companies when I sold calls at strike prices that provided significant profit.
I want investments in this space. I think opportunities exist that will duplicate
my experience with CAG, DD and DOW and provide income with capital gains.
Use
Market Volatility to Find Bargains.
Potash (POT) is my target. Potash’s stock price took a terrible plunge
the end of July from $44 per share to $28 per share. The plunge was related to a quarter of weak
earnings. All of the stocks in this
space tend to be volatile, but POT is more volatile because its mines are in
unstable places and can be affected by local unrest. Lately, POT has scratched its way back up
to the low $30’s. I think this is a bargain
price for yield hungry investors.
Take
Profit and Reinvest for More Income.
Like all companies in this space, POT has been a regular
dividend producer. Although POT is not
technically a Dividend Machine because it has not consistently raised the
dividend every four quarters, the ten year dividend history is encouraging.
If you owned POT in 2003 you would have received
$.25 per share in quarterly dividends and today you get $.35 per share; a forty
percent increase in income over ten years.
As an income investor I will move my proceeds from
CAG, DD and DOW which provided just above three percent to POT which yields
4.34%. Moreover, POT like these other
companies, has enough volatility to provide covered call income potential.
Dividend
Fundamentals.
This table presents the key data I use to determine
if I want to buy a stock.
Notice that
POT pays a 4.34% dividend yield with a very low debt to equity ratio of
.35. Even during the rough years of
2008 and 2009, POT continued to pay a dividend.
This investment is not for the investor who cannot
tolerate volatility. However, the
patient income investor, I think, will benefit from owning POT. Do your own research; and there is plenty of
opinion about this stock; then decide if POT’s enticing yield of 4.34% fits
into the income producing portion of your portfolio.
The
Money Madam
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