Sociedad Quimica Y Minera (SQM) is our top income-oriented pick for 2023, explains John Gardner, money manager and editor of Blackhawk Wealth Advisors' Market Insights.
The global company is an investment in the lowest-cost lithium deposit in the world, specialty fertilizer blends used in high-value crops such as fruits and vegetables globally, and the world's largest producer of iodine, used largely in healthcare and pharmaceuticals.
Headquartered in Santigo, Chile, SQM was formed in 1968 after a merger of companies with beginnings going back to a Guggenheim operation that started in 1926. SQM began trading on the NYSE as an ADR in 1995. It has offices in 20 countries and operates in 110 countries.
The chemical and mining company has a consistent history of increasing dividend payments since 1994 when is distributed $0.05 per share. Shareholders have received $5.96 thus far in 2022. That current dividend equates to about a 6% yield.
This stock has been a dividend payor with the benefits of capital appreciation as the world's hunger for basic food and appetite for electric vehicles remains high. SQM’s food and fertilizer products can help combat the global food crisis, while the company’s lithium supply will be in strong demand to satisfy EV battery needs for decades to come.
SQM has significantly outperformed the SP 500 both short and long-term. With a current market cap of over $27 billion, SQM has solid institutional investor support. Nearly 520 mutual funds own shares today, an increase from 356 funds a year ago.
Although the stock has been under heavy accumulation this year and has a bullish current technical set-up, it is more volatile than most cyclicals. As a materials company, SQM’s stock price will be sensitive to the underlying price movement of the commodities it produces. Don’t let short-term price swings shake you out of a proven long-term income and growth stock. Invest for the current income and hold for the capital gains.
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