As of February 11, 2016, Mosaic (MOS) paid a quarterly dividend of $0.28 per share. In the past four quarters, it paid an annual dividend per share of $1.10, which has grown at a compounded annual growth rate of about 3.2% over the past three years.
Over the same period, Agrium’s (AGU) dividend grew by 12.6% at a compounded annual growth rate over the past three years. However, when considering dividends, it’s more important to look at the company’s dividend yield if you’re an income investor.
As you can see in the above graph, Mosaic’s (MOS) dividend yield has risen over the past few years. As of this writing, it stands at 4.7% compared to Agrium’s (AGU) yield of 4%. Even though Agrium has a higher dividend amount in terms of dollars, Mosaic has a better yield. This essentially means that you’ll get 4.6% return on $100 invested in Mosaic compared to 4% for investing $100 in Agrium.
But with a shaky commodity pricing environment, investors often ask about the sustainability of the dividend yield. Fertilizer prices play a key role in a company’s dividend policy. A weak pricing outlook affects dividend policy. Recently, Potash Corporation (POT), which had one of the highest dividend yields of ~10% compared to 3.9% for CF Industries (CF), slashed its dividends in anticipation of a weakness in fertilizer prices.
Some of these companies can also be accessed through the Materials Select Sector SPDR ETF (XLB), which invests 12% of its portfolio in agricultural chemicals.