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3 Reasons I’ll Never Sell This Cash-Gushing Dividend Giant

Alex Smith

Alex Smith

3 weeks ago

5 min read 👁 3 views
3 Reasons I’ll Never Sell This Cash-Gushing Dividend Giant

When it comes to building a long-term portfolio, the best stocks to buy are often the ones you have the confidence to hold for years.

These types of stocks are often businesses that operate in essential industries, generate massive and consistent cash flow, and are run by management teams with a long track record of allocating capital responsibly. That’s exactly why Nutrien (TSX:NTR) is a stock I plan to hold for the long haul.

Nutrien is one of the best stocks to buy and hold for years because it’s one of the largest players in a critical industry that the global economy simply cannot function without. And because of that, it continues to generate huge amounts of cash, pay a reliable and growing dividend, and reinvest in growing the business over the long haul in a disciplined way.

So, if you’re looking for a high-quality dividend stock that you can buy now and hold for years, here are three reasons why Nutrien is a stock I’m never planning to sell.

Nutrien operates in an essential industry

Because Nutrien is the largest provider of crop inputs globally, supplying farmers with potash, nitrogen, and phosphate, which are all essential nutrients required to grow food, it’s one of the most reliable businesses you can buy.

This isn’t a cyclical consumer product that people can cut back on when times get tough. Global food demand doesn’t disappear during recessions. That makes Nutrien’s underlying business far more resilient than many investors realize.

Farmers may delay equipment purchases or expansion plans in poorer economic environments, but they still need fertilizer to maintain crop yields. That steady demand is the foundation of Nutrien’s long-term stability.

Its scale and dominance create a massive competitive advantage

Nutrien isn’t just another fertilizer producer. It is the largest potash producer in the world and one of the biggest nitrogen suppliers globally. That scale matters both for its resiliency and profitability.

For example, because of its size, Nutrien benefits from lower production costs, better logistics, and stronger pricing power than smaller competitors. Furthermore, its improved operational efficiency helps it to maintain its profitability across commodity cycles while weaker players struggle when prices fall.

On top of that, Nutrien’s retail network gives it direct access to farmers across North America, South America, and Australia. That customer relationship is incredibly valuable and very difficult to replicate.

Its operations are vertically integrated

One of the most underappreciated aspects of Nutrien’s business is its vertical integration. The company doesn’t just produce fertilizers. It also distributes them directly to farmers through its massive retail network.

That means Nutrien captures value across the entire supply chain. When commodity prices are strong, its production business benefits. When prices are weaker, its retail operations help smooth out earnings.

This diversification within its own business model reduces volatility and makes cash flow more predictable. And predictable cash flow is exactly what long-term investors should be looking for.

Furthermore, its size and scale, combined with its vertically integrated operations, create a significant competitive advantage, which is why it’s such a dominant stock in such a defensive industry.

The bottom line

Each of those reasons is compelling on its own and demonstrates why Nutrien is a high-quality stock. However, when you combine them, it becomes clear that Nutrien is a stock you’ll never want to sell.

But in addition to its operations, Nutrien is also consistently returning capital to shareholders through dividends and share buybacks.

In fact, in addition to the 3.2% dividend yield Nutrien offers today, it’s also consistently increasing that dividend each year as well.

So, if you’re looking for a high-quality and reliable dividend stock to buy now and hold for years, Nutrien is certainly one of the best to consider.

The post 3 Reasons I’ll Never Sell This Cash-Gushing Dividend Giant appeared first on The Motley Fool Canada.

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Fool contributor Daniel Da Costa has positions in Nutrien. The Motley Fool recommends Nutrien. The Motley Fool has a disclosure policy.

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