Albemarle’s dividend yield
As of August 30, Albemarle (ALB), known for lithium, has a dividend yield of 1.4%. In comparison, its peers FMC (FMC), W.R. Grace (GRA), and Sociedad Química y Minera de Chile (SQM) have current dividend yields of 0.78%, 1.35%, and 4.8%, respectively.
ALB’s current dividend yield has increased ~40% compared to the previous year and is best among its peers with the exception of SQM. However, its current dividend yield is still lower than the yield generated from one-year Treasury bonds, thus making it a little bit unattractive to long-term investors who prefer stocks with higher dividend yields and good dividend growth.
Why ALB’s dividend yield has risen in 2018
The above graph indicates that since 2018, ALB’s dividend has bounced back significantly after falling below 1%. The increase in its dividend yield can be attributed to the increase in its dividend rate, which increased 4.6%. However, the primary reason is the big fall in its stock.
ALB stock has fallen 25.6% year-to-date. The fall was due to concerns that the lithium supply will be higher than the market demand, which resulted in declining lithium prices. ALB’s dividend might continue to stay in that range for a while. However, a further fall in ALB stock or an increase in its dividend rate could improve ALB’s dividend yield.
Investors can indirectly hold Albemarle by investing in the Global X Lithium ETF (LIT), which has invested 5.4% of its portfolio in ALB as of August 30.