Is Nutrien Ltd. (TSX:NTR) an Attractive Stock Pick for Your Dividend-Focused RRSP?

Improving conditions in the crop nutrients market bode well for Nutrien Ltd. (TSX:NTR)(NYSE:NTR) investors. Is this the time to buy?

| More on:
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

Canadian investors are searching for top-quality companies to hold inside their self-directed RRSP portfolios.

The strategy makes sense, especially when dividends are invested in new shares to take advantage of the power of compounding. Over a few decades, investors can see reasonably modest initial investments turn into large nest eggs.

Let’s take a look at Nutrien Ltd. (TSX:NTR)(NYSE:NTR) to see if it deserves to be in your retirement fund.

A new company

Nutrien was formed through the recent merger of Potash Corp. and Agrium. The two companies realized they would be stronger together than to remain as independent businesses, and the early signs appear to suggest the decision was a good one for investors.

In the Q1 2018 earnings report, Nutrien said it has already achieved US$150 million of US$500 million in targeted annual synergies. Management also upgraded the 2018 full-year earnings per share (EPS) from operations to US$2.20-2.60 from US$2.10-2.60.

The crop nutrients sector went through a multi-year downturn, but the situation is improving. Nutrien raised its global potash shipment forecast for 2018 to 64.5-66.5 million tonnes.

In addition to stronger demand, spot prices are improving in key markets. As a result, Nutrien raised its guidance range for both potash sales volumes and potash EBITDA for this year.

Nitrogen guidance was also increased, and Nutrien said the phosphate and sulphate results should be in line with 2017.

Growth

The combined wholesale operations of Potash Corp and Agrium put Nutrien in a strong position to compete with global competitors. Both companies wrapped up major capital programs before the merger, so the company has the modern facilities it needs to ramp up output as needed.

Agrium also brought its global retail operations to the new company, and Nutrien is expanding that business. The company acquired 29 retail locations through the first four months of 2018, and investors could see the trend continue.

The retail group provides seed and crop protection products to farmers around the globe.

Dividends

Nutrien declared a quarterly dividend of US$0.40 per share. As market conditions improve, investors should see a nice increase to cash flow to support dividend growth.

At the time of writing, the stock provides a yield of 3%.

Should you buy?

Global fertilizer demand is expected to increase in the coming decades, as farmers are pushed to produce more with less land.

If you are searching for a buy-and-hold dividend stock to add to your RRSP portfolio, Nutrien looks attractive today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Walker owns shares of Nutrien. Nutrien is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

5 Dividend Stocks to Buy With Yields Upwards of 5%

These five companies all earn tonnes of cash flow, making them some of the best long-term dividend stocks you can…

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Investors: 3 Stocks to Start Building an Influx of Passive Income

A TFSA is the ideal registered account for passive income, as it doesn't weigh down your tax bill, and any…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

Royal Bank of Canada stock is one of the safest TSX dividend stocks to buy. So is CT REIT and…

Read more »

Growing plant shoots on coins
Dividend Stocks

1 of the Top Canadian Growth Stocks to Buy in February 2023

Many top Canadian growth stocks represent strong underlying businesses, healthy financials, and organic growth opportunities.

Read more »

stock research, analyze data
Dividend Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

Here are three TSX stocks that could outperform irrespective of the market direction.

Read more »

woman data analyze
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy This Month

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock that long-term investors should consider in this current market.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Better TFSA Buy: Enbridge Stock or Bank of Nova Scotia

Enbridge and Bank of Nova Scotia offer high yields for TFSA investors seeking passive income. Is one stock now undervalued?

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Top Stocks Just Became Canadian Dividend Aristocrats

These two top Canadian Dividend Aristocrats stocks are reliable companies with impressive long-term growth potential.

Read more »