Smart Dividend Portfolio Edition #45: Agribusiness Powerhouse
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Dear Investor,
Welcome to the 45th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: January 27, 2025
Stock clocked in their second consecutive weekly gain and the best start to a presidential term since Ronald Reagan was sworn in to office in 1985. The S&P 500 (SPX) was up by 1.74% for the holiday-shortened week, while the Dow Jones Industrial Average (DJIA) jumped by 2.15%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) rose by 1.65% and 1.55%, respectively.
Although the DJIA led the gains this week, it was the S&P 500 that reached a new all-time high on Thursday. Despite Friday’s dip, achieving the first record of the year is expected to bolster investor sentiment moving forward.
President Trump appears to be enjoying a honeymoon with the stock markets, as investors react positively to his statements and actions. On his first day in office, Trump signed a record 26 executive orders, addressing areas such as energy, immigration reform, and technology. Many of these were more moderate than anticipated, which was welcomed by the markets. Trump’s statements on tariffs were also much more moderate than feared, further easing investor anxiety.
Trump’s remarks on decreasing energy costs and urging OPEC to reduce oil prices weighed on energy stocks but boosted overall market sentiment. However, a key driver of optimism was the President’s pro-tech agenda. This was reflected in an executive order directing agencies to craft policies ensuring U.S. dominance in AI, as well as the announcement of a new AI infrastructure initiative, project “Stargate.”
Trump pledged to demand Federal Reserve rate cuts following potential declines in oil prices. While markets received this news favorably, the likelihood of success remains uncertain. Consumer sentiment dropped for the first time in six months as inflation expectations surged to their highest since May. The Federal Reserve has signaled hesitancy about further rate cuts, and renewed easing may depend on favorable inflation trends and clarity on government spending.
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This Week’s Quality Dividend Stock Idea
Bunge Global SA (BG) is an agribusiness and food company specializing in sourcing, processing, and marketing oilseeds, grains, and plant-based oils. Its operations include crop origination, oilseed crushing, agricultural logistics, and the production of edible oils and specialty ingredients. A global leader in oilseed processing, BG is a trusted supplier to the food, feed, and bioenergy industries, supporting diverse market needs worldwide
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Driving Global Growth and Agribusiness Leadership
Bunge Global traces its roots to 1818 when Johann Peter Gottlieb Bunge founded a trading company in Amsterdam focused on grain and commodities. By 1884, Bunge expanded to South America, establishing operations in Argentina, and laying the foundation for a global agribusiness presence.
In the early 20th century, Bunge diversified into oilseed processing, milling, and fertilizer production, strengthening its foothold in key agricultural markets. Following World War II, Bunge accelerated its growth by investing heavily in infrastructure, including crushing plants and logistics networks. These advancements enabled the company to handle commodities on a larger scale, enhancing its competitive edge.
The company went public in 2001, listing on the New York Stock Exchange. The proceeds from its IPO fueled its expansion, including the pivotal 2002 acquisition of Cereol, which bolstered its presence in Europe and Asia. Over the next two decades, Bunge continued expanding its global reach, entering high-growth markets such as Brazil and China, and diversifying its portfolio with specialty oils, biofuels, and plant-based ingredients.
The transformative announcement of a $34 billion acquisition of Viterra in 2023 further positioned Bunge as a global agribusiness leader. The acquisition is expected to close this year. Both companies have complementary assets should will link production hubs to growing markets, enhancing value chain flexibility and ensuring resilient cash flow through diversified operations.
Today, with a market capitalization of nearly $11 billion, annual revenues of ~$54.5 billion, and operations in over 40 countries, Bunge continues to innovate and expand, leveraging its integrated agribusiness model to meet rising global demand for food, feed, and sustainable energy.
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Integrated Agribusiness Model Fuels Growth and Resilience
The company operates an integrated agribusiness model, generating revenue from sourcing, processing, and marketing agricultural commodities. Its key operations include oilseed crushing, grain origination, and the production of specialty oils, proteins, and biofuels. Bunge leverages its extensive infrastructure, including storage facilities and processing plants, to connect farmers with global markets and optimize supply chain efficiency.
Bunge’s global scale and geographic diversification mitigate risks from regional crop failures and geopolitical instability. The company’s leadership in oilseed processing positions it to capitalize on rising demand for plant-based proteins and renewable energy, including biodiesel. Strategic investments in technology and data analytics further enhance margins and drive consistent free cash flow.
Bunge has demonstrated a strong ability to navigate market cycles, with earnings per share and revenue trends reflecting resilience and growth over the past five years. After significant gains in 2021 and a slight dip in 2022, both EPS and revenue rebounded in 2023, underscoring the company’s adaptability to shifting market conditions. Despite some normalization in 2024, Bunge’s financial performance remains robust, highlighting its long-term growth trajectory and effective management of cyclical challenges.
In the third quarter of FY24, Bunge posted adjusted EPS of $2.29, exceeding estimates, though revenues of $9.3 billion fell short of expectations. For FY25, the company projects adjusted EPS of “at least” $9.25. Analysts anticipate annual revenue growth of 3.4% and earnings growth of 16.3%, with return on equity forecasted at 10.3% over the coming three years. Bunge is expected to announce its fourth-quarter results on February 5th.
Despite a high debt-to-equity ratio, strong cash flow supports an upgraded credit rating of “BBB+” from Fitch, driven by a robust business profile and midcycle EBITDA of $2 billion. The credit rating agency expects that the company’s acquisition of Viterra will enhance scale and diversification.
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Dividend Growth and Strong Upside Potential
Within the past five years, Bunge Global has increased its dividends by ~8% annually, showcasing its commitment to shareholder returns. The company currently offers an annual dividend of $2.72 per share, yielding 3.5%. Its payout ratio of ~25.% comfortably covers payouts, while a manageable cash payout ratio of ~35% highlights strong FCF support. Analysts forecast a 3.33% dividend increase for the current year, further underscoring its growth potential.
In addition to dividends, Bunge enhances shareholder value through share repurchases. Last year, the Board approved an additional $500 million for its buyback program, increasing the total authorization to $1.3 billion. This program, funded by proceeds from the sale of its sugar and bioenergy joint venture, offers Bunge flexibility to execute repurchases based on market conditions. The authorization has no expiry date.
Bunge Global’s stock has declined by about 10% over the past 12 months due to commodity price volatility and investor concerns amid uncertain economic environment. However, this underperformance left BG stock trading at a significant discount to its sector averages as well as to its peers in the industry. Leading Wall Street analysts project optimism in the company’s ability to leverage its strong business model and strategic initiative, with an average price target implying an upside of over 27% in the next 12 months.
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Investing Takeaway
Bunge Global SA is a resilient agribusiness leader with a robust integrated model and global diversification. The company’s attractive valuation offers 30.5% upside potential while strong cash flow supports dividend growth and a $1.3 billion buyback program. Despite high leverage, an upgraded credit rating highlights financial stability, making Bunge a compelling choice for investors.
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Dividend Investor Portfolio
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Portfolio News
▣ Philip Morris (PM) could benefit from the Trump administration’s withdrawal from the U.S. FDA’s proposed ban on menthol cigarettes. Menthol cigarettes corner a 33% market share in the U.S. and have drawn the ire of several health advocacy groups due to their addictive nature and their outsized impact on Black communities, where they are heavily marketed.
▣ Qualcomm (QCOM) was placed on a “positive catalyst watch” by JP Morgan ahead of its fiscal first-quarter earnings on February 5th. JPMorgan expects that the chipmaker will benefit from the subsidies in China under the Chinese Government’s recently-launched “National Subsidy Program” for consumer electronics. Under this program, consumers can get subsidies for smartphones, tablets, or smartwatches. China is an important market for QCOM, and this subsidy could boost the demand for smartphones that use QCOM’s chips.
▣ ADP (ADP) is expected to report its fiscal Q2 results on January 29th. Analysts are expecting the company to report earnings of $2.29 per share on revenues of $17.6 billion. The company has raised its FY25 forecast, reflecting the impact of the acquisition of WorkForce Software and now anticipates that its revenues will grow in the range of 6% to 7%, compared to its prior forecast of growth in the range of 5% to 6%, while adjusted earnings are forecasted to rise between 7% and 9% year-over-year, compared to its its previous projection of growth in the range of 8% to 10%.
▣ LyondellBasell (LYB) is expected to report its Q4 results on January 31st. Analysts have projected the company to report earnings of $0.72 per share on revenues of $9.22 billion. This is lower than the prior (third) quarter when LYB reported earnings of $1.88 per share on revenues of $10.3 billion. The company has projected its results in the second half of the year to be lower than the first half of FY24, due to by slower economic growth and a seasonally lower demand in the fourth quarter.
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Recent Trades
None at the moment, although we are constantly evaluating stocks for a possible addition to the portfolio. Stay tuned.
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Portfolio Attributes
Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
3.79% | +9.73% | $5,388.17 |
Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
Automatic Data Processing (ADP) | Mar 14, 2025 | Apr 01, 2025 | 2.46% | $6.16 |
Allianz SE ADR (ALIZY) | May 09, 2025 | May 28, 2025 | 5.79% | $1.52 |
Amgen (AMGN) | Feb 14, 2025 | Mar 07, 2025 | 3.27% | $9.52 |
BlackRock (BLK) | Mar 07, 2025 | Mar 22, 2025 | 2.56% | $20.40 |
Edison International (EIX) | Jan 07, 2025 | Jan 31, 2025 | 5.12% | $3.31 |
EOG Resources (EOG) | Jan 17, 2025 | Jan 31, 2025 | 3.06% | $3.92 |
IBM (IBM) | Feb 10, 2025 | Mar 10, 2025 | 3.13% | $6.68 |
JPMorgan Chase (JPM) | Jan 06, 2025 | Jan 31, 2025 | 2.86% | $5.00 |
Kroger (KR) | Feb 15, 2025 | Mar 01, 2025 | 2.82% | $1.28 |
LyondellBasell (LYB) | Mar 10, 2025 | Mar 17, 2025 | 5.62% | $5.36 |
PepsiCo (PEP) | Mar 07, 2025 | Apr 07, 2025 | 3.64% | $5.44 |
Philip Morris (PM) | Mar 21, 2025 | Apr 09, 2025 | 6.06% | $5.40 |
Qualcomm (QCOM) | Mar 03, 2025 | Mar 24, 2025 | 2.25% | $3.40 |
VICI Properties (VICI) | Mar 21, 2025 | Apr 04, 2025 | 5.19% | $1.72 |
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.