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Albemarle: 25 Years of Dividend Growth for This Lithium Stock

Albemarle: 25 Years of Dividend Growth for This Lithium Stock
Piotr Trojanowski | Dreamstime.com

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Friday, 10 May 2019 01:41 PM Current | Bio | Archive

Lithium may not be widely known among investors yet, but it is drawing increasing attention from those who seek to profit from its immense growth potential. Lithium could be a major growth theme over the next several years.

Investors looking to gain exposure to the lithium industry should take a closer look at Albemarle Corporation (ALB). Albemarle is highly profitable, growing, and pays a dividend to shareholders. As a result, Albemarle could be one of the top lithium stocks for 2019.

A Modern-Day Gold Rush

Lithium is a metal which has a wide variety of industrial purposes, just some of which include the manufacturing of aircraft, batteries, and even medicine. It has immense growth potential because demand for lithium is soaring across multiple areas, the most exciting of which include electric vehicles and renewable energy.

Albemarle is a global mining company, based in the United States. It has operations in more than 100 countries around the world. While Albemarle has a diversified business structure—with bromine and refining operations—it is also a major lithium miner. Albemarle produces lithium from salt brine assets in Chile and two joint ventures in Australian mines.

The company continues to execute on its strategic priorities. In the 2019 first quarter, Albemarle generated revenue of $832 million. Excluding currency and divestments, revenue increased 6% for the quarter. Adjusted earnings per share increased 4% from the same quarter a year ago. Lithium sales declined by 2% in the first quarter, as a significant rain event in Chile suppressed production. However, production should normalize in 2019, and in a positive development pricing of lithium increased in the first quarter.

Albemarle’s net sales are expected to increase 8%-14% in 2019, driven by higher production volumes and pricing across its portfolio. Albemarle expects full-year adjusted EPS in a range of $6.10 to $6.50 for 2019. At the midpoint, the company forecasts adjusted EPS of $6.30, which would represent an increase of 11%-19% from 2018. The company expects to remain highly profitable, which will allow it to continue raising its dividend.

Lithium Growth Pays Dividends

Typically, investors have to pay a steep price for stocks that operate in growth industries. Not only does Albemarle provide access to the lithium growth story, the stock is highly attractive for value and income investors.

While growth stocks usually have high P/E ratios, inconsistent profitability, and do not pay dividends, Albemarle has a modest valuation and has a long history of dividend increases. Based on this, the stock has a P/E ratio of just, which is a fairly low valuation multiple.

In addition, Albemarle pays an annual dividend of $1.47 per share, which represents a current yield of 2% right now. This is slightly higher than the average dividend yield of the broader S&P 500 Index. And, Albemarle has increased its dividend for 25 consecutive years, including a 10% dividend increase in 2019. With a projected dividend payout ratio of 23% for 2019, Albemarle should have little trouble raising its dividend each year going forward.

Albemarle has a forward P/E ratio of 11.5, a fairly low valuation multiple for a highly profitable and growing business. With a low valuation, 2% dividend yield, and strong future growth potential, Albemarle is an appealing stock for growth, value, and income all in one.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

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Lithium may not be widely known among investors yet, but it is drawing increasing attention from those who seek to profit from its immense growth potential. Lithium could be a major growth theme over the next several years.Investors looking to gain exposure to the lithium...
albemarle, dividend, growth, lithium, stock
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2019-41-10
Friday, 10 May 2019 01:41 PM
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