The Basic Materials sector has taken a beating over the last two years mainly due to a slowdown in China. While the sentiment on the entire sector has been negative, investors are ignoring the fact that it is the metal & mining companies that are facing a gloomy outlook.
Companies such as Potash Corp. of Saskatchewan (TSX: POT) and Agrium Inc. (TSX: AGU) focus on agricultural chemicals. The outlook for agricultural chemicals is extremely bullish due to the ever growing global population. As farmers look to improve yields to feed the ever growing global population, demand for fertilizers will be robust in the long term.
Due to the sell-off in the Basic Materials sector, Potash Corp. and Agrium look attractive in terms of valuation. More importantly, both companies offer regular dividend payments. Potash Corp. has consistently raised its dividend payments over the last five years. The stock currently offers an impressive dividend yield of 6.20%. Given Potash’s strong cash flows, the dividends look safe.
Agrium declared a quarterly dividend last month. The dividend will be payable on April 21st. AGU currently offers a dividend yield of 4.06%. Over the last five years, the stock has returned more than 34%.
