Agrium Inc. (AGU - Analyst Report) has announced its plans of a 50% hike in its quarterly dividend to 75 cents per share from the prior payout of 50 cents. On annualized basis, this represents a payout of $3.00 per share, an increase by $1.00 per share. The increased quarterly dividend will be paid on Oct 17, 2013, to stockholders of record as of Sep 30, 2013.
The dividend increase is part of Agrium's annual strategic review process. It is also a step toward acknowledging the company’s strength in its long-term agriculture fundamentals and the benefits of its integrated model.
The dividend hike testifies Agrium's ability to generate significant cash flow from its business and also proclaims the strength that it holds across the crop-input value chain. The company is committed to deliver value-added growth while maintaining shareholders value.
Agrium, a prominent fertilizer company along with Mosaic (MOS - Analyst Report) and Potash Corp. of Saskatchewan Inc. (POT - Analyst Report), is a major retailer of agricultural products and services in North and South America. The company is also a leading global wholesale producer and marketer of all three major agricultural macronutrients − nitrogen, potash and phosphate − apart from being a premier supplier of micronutrients and specialty fertilizers in the U.S. and Canada.
Agrium also provided its outlook for third-quarter 2013. The company expects retail EBIT to outperform its third-quarter 2012 results and be in line with the strong results achieved in the third quarter of 2011. However, it expects lower sales volumes and soft nutrient prices to negatively impact the wholesale results for its all three nutrients in the third quarter. The company sees wholesale EBIT to be roughly $200million, down from the same period prior year.
Agrium expects wholesale nitrogen and phosphate sales volumes to decline 20% and 30%, respectively, from the previous-year quarter and potash volumes are projected to be around 30% lower than normal for a third quarter. The benchmark nutrient prices were down 20% to 30% in the third quarter from the year-ago quarter.
All three nutrients faced delayed demand in the quarter. Nitrogen facilities encountered plant disruptions, which negatively impacted volumes by roughly 100,000 tons in the third quarter and also impacted costs.
Agrium currently retains a Zacks Rank #4 (Sell). However, in the fertilizer industry, China BlueChip ADR with a Zacks Rank #1 (Strong Buy) is a good option for investment.