Key Takeaways
✅ Prices of fertilizer as well as fertilizer stock prices came down a lot
✅ Although controversial, fertilizers are needed to feed the world
✅ Climate change & limited arable land make the case even stronger
✅ We review the best dividend-paying fertilizer stocks
First Off, What Are Fertilizers?
Fertilizers are substances added to soil to increase its ‘fertility’ and expand output. Farmers either use natural substances like animal dung, aka cow shit, or chemicals. Examples of fertilizers:
- Animal dung (organic)
- Potash (chemical)
- Nitrogen (Ammoniak, chemical)
- Phosphates (chemical)
- Kalium
- Magnesium
Put simply, fertilizers are used to nourish soil and help to maximize crops yields.
The Global Fertilizer Market
Globally, about $200 Bio US is generated via the sales of fertilizers, according to Statista. The largest fertilizer-producing countries are Russia and Ukraine, and the war upends the entire global fertilizer market. This drives prices for fertilizers higher, making life difficult for the farmers, but benefiting companies that produce fertilizers.
Key Megatrends Impacting Fertilizer Companies
Climate Change
More and more land becomes less fertile due to the changing climate. If used rightly, fertilizers can be used to mitigate greenhouse gas emissions and reduce environmental pollution.
Population Growth
Fertilizers help meet the increasing demand for food from a growing global population. It is expected that the world’s population to reach 9.7 billion by 2050. Consequently, this will increase the demand for food. And here fertilizers play a vital role in increasing output, or crop yields, and ensuring food security, making them essential in agricultural production.
Limited Arable Land & Soil Erosion
Fertilizers maximize crop productivity on farming land that is becoming more limited. In many areas of the world, farmland is shrinking due to urbanization soil erosion, and environmental degradation. Fertilizers can enable farmers to maximize the productivity of existing arable land, making them crucial for meeting the increasing demand for food.
Sustainable agriculture
By using fertilizers efficiently, farmers can reduce the amount of land required for farming, minimize water usage, and decrease greenhouse gas emissions. As sustainability becomes a global priority, fertilizer companies that promote and develop sustainable solutions are likely to benefit.
Why The Use Of Fertilizers Is Controversial?
The use of fertilizers is controversial due to the negative environmental impacts they can have.
The use of chemical fertilizers can lead to air, water, and soil pollution, affecting the water-holding capacity of the soil and causing excessive water consumption. Additionally, excessive fertilizer application can result in the release of harmful greenhouse gases and eutrophication of waterways.
Yet again, the use of fertilizers is vital to be able to produce enough food.
The 6 Largest Fertilizer Companies, by Revenue
The largest fertilizer-producing company is Nutrien (NTR), with $33.5 Bio US in sales. Based on the market cap, the most valuable fertilizer stock is Corteva, with the ticker symbol $CTVA.
| Sales in Bio $ | M.Cap in Bio $ | PS Ratio | ||
| $NTR | Nutrien |
$33.5 |
$29.8 |
0.92 |
| $CTVA | Corteva |
$17.5 |
$34.8 |
2.02 |
| $MOS | Mosaic |
$16.8 |
$12.7 |
0.79 |
| $CF | CF Industries |
$8.7 |
$14.4 |
1.70 |
| $FMC | FMC |
$5.4 |
$11.0 |
2.08 |
| $KPLUY | K+S |
$5.2 |
$3.5 |
0.66 |
The Best Fertilizer Stocks
When looking at their respective valuations, we see the following:
| PE Ratio | PB Ratio | ||
| $KPLUY | K+S | 3.29 | 0.48 |
| $CTVA | Corteva | 38.05 | 1.33 |
| $FMC | FMC | 17.96 | 3.29 |
| $CF | CF Industries | 6.16 | 2.50 |
| $MOS | Mosaic | 6.04 | 1.02 |
| $NTR | Nutrien | 8.48 | 1.20 |
The fertilizer stock that jumps out is Germany-based K+S, one of the world’s largest salt and mineral producers.
Let’s now look at the dividends of these companies.
Dividend-Paying Fertilizer Stocks
| Symbol | Yield % | Div/yr | 5Yr Growth | |
| $KPLUY | K+S | 5.8% | 1 | – |
| $CTVA | Corteva | 1.2% | 4 | – |
| $FMC | FMC | 2.6% | 4 | 27.2% |
| $CF | CF Industries | 2.1% | 4 | 3.2% |
| $MOS | Mosaic | 1.9% | 4 | 8.5% |
| $NTR | Nutrien | 3.4% | 4 | 7.9% |
We can note that most companies pay around 2-3%, only K+S stands out again. Most likely because its share price decreased substantially.
According to the above simple analysis, it is my top pick for the best fertilizer stock.
Let’s take a closer look at K+S.
🏆 My Fertilizer Stock Top Pick
K+S AG, ticker $KPLUY, is a German company that mines and processes mineral resources.
It is the largest manufacturer of salts globally and has production facilities in Europe, North America, and South America.
The company produces fertilizers, plant care products, cat litter, food and road salts, and various other chemicals.
After the Ukraine war broke out, uncertainty was extremely high, and prices of fertilizer increased rapidly. Companies manufacturing fertilizers benefited from those higher prices, booking record profits.
Once the market realized that in particular European producers of fertilizers suffer from higher energy prices, realization set in and prices came down a lot.
Checking out K+S profile on SeekingAlpha (save $50 on SeekingAlpha Premium + get a 7-day tryout with this link), we can see a clear bullish sentiment across all contributors and analysts.
Personally, K+S is my favorite fertilizer stock.
Conclusion – Will I Buy?
I believe K+S is an excellent company, but I am not buying at this stage. I really don’t like its long-term stock chart (check ie. 2010 to 2023).
There is too much controversy around the negative impact chemical fertilizers have.
I prefer to invest in sectors with positive tailwinds, and not harsh headwinds.
Final verdict: I pass on fertilizer stocks.
📘 Read Also
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- The 10 Best Water Stocks – With Dividends!
- How To Invest In Battery Metal Stocks – A Simple Guide
- Top 10 Reasons Why Investing in Uranium Stocks Makes Sense
FAQ
Which fertilizer stocks to buy?
When considering investing in fertilizer stocks, stick to one of the six largest fertilizing-producing companies:
$NTR Nutrien with $33.5 Bio in sales
$CTVA Corteva with $17.5 Bio in sales
$MOS Mosaic with $16.8 Bio in sales
$CF CF Industries with $8.7 Bio in sales
$FMC FMC with $5.4 Bio in sales
$KPLUY K+S AG with $5.2 Bio in sales
Take PE, PB, debt, and input costs such as energy prices into account when reviewing the respective companies.
Why are fertilizer stocks going down?
After the Ukraine war broke out, the prices of fertilizers increased manyfold, resulting in record profits for fertilizer companies. Once the market realized that energy prices increased a lot, one of the largest input costs for fertilizing companies, the prices of fertilizer stocks went down.
Fertilizer stocks where to buy?
You can buy the most-known fertilizer stocks at most stock brokers, offering the buying and selling of U.S. or Europe-listed stocks. Some well-respected and recommended stock brokers:
– TradeRepublic
– Bitpanda
– eToro
– Charles Schwab
– Interactive Brokers
– etc.
Are fertilizer stocks a good investment?
Fertilizer stocks are relatively volatile. Energy costs are one of the main input costs. After the Ukraine war broke out, fertilizer stocks gained a lot in value because Russia as well as Ukraine are two of the largest fertilizer-producing countries in the world.
Generally, fertilizers are required to feed the world’s population, yet, chemical fertilizers are also controversial due to their negative impact on soil degradation and greenhouse gas emissions.
Age when reaching FI: 40 in 2018
Left the rat race: May 2017
Living in: Singapore
Number of kids: 2
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