3/10/25
Ingredion Incorporated (NYSE: INGR) is a well-established global player in the ingredient solutions market, supplying everything from starches and sweeteners to plant-based proteins. Its products are found in a variety of industries, including food and beverages, pharmaceuticals, and even industrial applications. As a company that has consistently generated steady cash flow, Ingredion has made a name for itself as a solid dividend-paying stock.
While the company has hit a few bumps recently with declining revenue and earnings growth, its strong financial position and commitment to returning value to shareholders keep it attractive for dividend investors. Let’s take a deeper look at what makes Ingredion an income-generating stock worth considering.
Key Dividend Metrics
📌 Dividend Yield – 2.36% (Forward)
📌 Annual Dividend Per Share – $3.20
📌 5-Year Average Dividend Yield – 2.81%
📌 Payout Ratio – 32.54%
📌 Dividend Growth – Consistent increases over time
📌 Ex-Dividend Date – January 2, 2025
📌 Dividend Payment Date – January 21, 2025
Dividend Overview
Ingredion currently offers a forward dividend yield of 2.36%, which sits slightly below its five-year average of 2.81%. While that might not be the highest yield out there, the company’s dividend payments are backed by a solid balance sheet and reliable cash flow.
With a payout ratio of just 32.54%, Ingredion isn’t overextending itself to pay dividends. That means the company is keeping enough earnings on hand for reinvestment and future growth while still rewarding shareholders. This balance is key for long-term sustainability, and it suggests that Ingredion isn’t at risk of cutting its dividend anytime soon.
Although the company has faced some revenue pressure, its history of steady dividend increases shows a commitment to shareholders. It’s not a high-yield stock, but it is a stable one, which makes it a good fit for income investors who prefer reliability over chasing sky-high yields that might not last.
Dividend Growth and Safety
Dividend safety is one of the most important factors for income investors, and Ingredion checks a lot of the right boxes. The company has a long track record of dividend growth and has kept its payout ratio at a conservative level.
That said, recent numbers show some challenges. Revenue has declined by 6.3% year-over-year, and quarterly earnings growth is down 27.5%. If this trend continues, dividend growth could slow down, but there’s no immediate concern that Ingredion will stop increasing its payouts.
Cash flow is another reason why the dividend looks secure. Ingredion generates a strong $1.44 billion in operating cash flow, with $1.11 billion in free cash flow after accounting for expenses. That gives the company plenty of financial breathing room.
Another positive sign is Ingredion’s low volatility. With a beta of 0.75, the stock moves less than the overall market, making it a safer option for those looking to avoid major price swings while collecting steady dividends.
Chart Analysis
Price Action
Ingredion (INGR) has had a strong upward trend for most of the past year, with a notable breakout in late October that sent the stock sharply higher. That breakout was followed by a period of volatility, with price swings that gradually settled into a downtrend over the past few months. The recent price action shows the stock attempting to reclaim lost ground, closing at 135.47 after opening at 130.45. The day’s high of 136.51 suggests some buying interest, but the stock pulled back slightly before closing, indicating that sellers stepped in at higher levels.
Moving Averages
The 50-day moving average has been trending downward since peaking in December, reflecting the recent cooling off after the strong rally. The stock had dipped below this level but is now attempting to push back above it, which could signal the start of renewed momentum if it holds. Meanwhile, the 200-day moving average has remained in a steady upward trend, showing that the stock’s long-term trajectory is still positive. The fact that the price has bounced near this level in recent weeks suggests that investors are treating it as a key support area.
Volume Activity
Volume has been relatively steady, with a few notable spikes. The large-volume days in late October and early November coincide with the sharp price increase, indicating strong institutional buying at that time. More recently, volume levels have remained moderate, suggesting a balance between buyers and sellers as the stock consolidates. The most recent trading session showed increased volume, which could hint at renewed interest in the stock.
Relative Strength Index (RSI)
The RSI dipped to lower levels in recent months but has started to turn back up, reflecting increasing buying momentum. It had briefly spiked during the stock’s last major rally, followed by a cooldown phase that aligned with the stock’s pullback. Now, with the RSI rising again, it suggests that buying pressure is returning, though it’s not yet at overbought levels.
Recent Candlestick Behavior
The last five candles show a mix of consolidation and upward movement. The recent session had a strong close after a gap up from the previous day’s close, which can indicate growing bullish sentiment. There have been some long lower wicks in recent sessions, meaning buyers have been stepping in to defend lower prices. However, upper wicks on a few candles suggest sellers are still active at higher levels. The next few trading sessions will be important to see if this breakout attempt above the 50-day moving average holds or if the stock struggles with resistance.
Analyst Ratings
📈 Upgrades:
🔹 Oppenheimer – On February 5, Oppenheimer revised its price target for Ingredion from $178 to $167, maintaining an “outperform” rating. While this is a slight downward adjustment, it still signals confidence in the company’s long-term potential. Analysts cited the company’s steady cash flow and operational improvements as reasons for maintaining a positive outlook.
🔹 UBS – On November 15, UBS raised its price target from $165 to $173, reiterating a “buy” rating. The upgrade was based on Ingredion’s ability to navigate supply chain challenges and improve margins. The firm also highlighted strong institutional ownership and long-term demand for the company’s ingredient solutions.
📉 Downgrades:
🔻 BMO Capital Markets – On August 9, BMO Capital Markets adjusted its price target from $125 to $117, keeping a “market perform” rating. This downgrade reflected concerns over short-term revenue headwinds and commodity price volatility. Analysts pointed out that while Ingredion remains a solid company, near-term earnings pressure led to a more cautious stance.
🔻 Barclays – On June 1, Barclays slightly reduced its price target from $120 to $118, maintaining an “equal weight” rating. The downgrade was attributed to concerns about declining sales growth and potential margin compression in a competitive industry. Despite this, Barclays still expects Ingredion to perform in line with broader market trends.
🎯 Consensus Price Target:
The average analyst price target for Ingredion currently stands at $151.33, with individual targets ranging from $133 to $168. This consensus suggests a generally positive outlook, with some analysts expecting moderate upside from current price levels.
📊 Reasons for Upgrades and Downgrades:
Upgrades have primarily been driven by improving margins, strong cash flow, and the company’s ability to manage supply chain challenges effectively. Analysts who remain bullish believe Ingredion’s core business remains stable, with room for expansion into specialty ingredients.
On the other hand, downgrades have been influenced by revenue declines, economic uncertainty, and competitive pricing pressures. Some analysts remain cautious about the company’s ability to sustain growth in the face of rising raw material costs.
Investors looking at Ingredion should consider both the bullish and bearish arguments, weighing the company’s long-term potential against near-term risks.
Earnings Report Summary
Ingredion just wrapped up its latest earnings report, giving investors a clearer picture of how the company performed in the fourth quarter and throughout 2024. The numbers were a mix of positives and a few challenges, but overall, the company showed strong earnings growth and solid cash flow.
Fourth Quarter Performance
Earnings per share came in at $2.63, coming in above expectations and signaling that the company continues to manage its operations efficiently. Total revenue for the quarter was $1.87 billion, which was down about 8% from last year. That decline was largely due to lower raw material costs and the sale of its South Korea business. On the bright side, operating income jumped 29% to $282 million, thanks to cost controls and better margins.
Full-Year 2024 Overview
For the full year, Ingredion delivered adjusted earnings per share of $10.65, up from $9.42 the previous year. Annual revenue, however, dipped 10% to $5.63 billion, mainly because of lower corn prices and foreign currency fluctuations. Even with the revenue decline, Ingredion still generated $1.44 billion in cash from operations. The company made sure to reward shareholders, returning $426 million through dividends and share buybacks.
Breaking Down Performance by Segment
The Texture & Healthful Solutions division had a strong quarter, with operating income up 12%, driven by lower input costs and an uptick in demand. The Food & Industrial Ingredients segment in Latin America saw an even bigger jump of 26% in operating income, while the U.S. and Canada business gained 25%, both benefiting from lower costs and steady pricing on long-term contracts.
What’s Ahead for 2025
Looking forward, Ingredion expects earnings per share for 2025 to fall somewhere between $10.75 and $11.55. Revenue is expected to grow modestly, with increased demand helping to offset some pricing pressures and currency impacts. Operating income should see mid-single-digit growth, and the company is planning to invest $400 million to $450 million in capital expenditures.
Despite some revenue declines, Ingredion’s strong cash flow and earnings growth show that it remains a stable, well-managed company. With cost efficiencies in place and continued demand for its products, it looks set for another steady year ahead.
Financial Health and Stability
A financially healthy company is crucial for sustainable dividends, and Ingredion appears to be in a strong position. The company has a current ratio of 2.62, meaning it has more than twice the assets needed to cover short-term liabilities. That’s a great sign for stability.
Ingredion also holds $1.01 billion in cash, giving it liquidity to weather economic uncertainties. While the company does carry $2.04 billion in total debt, its debt-to-equity ratio of 53.13% is within a manageable range compared to industry peers.
Return on equity (ROE) sits at 17.62%, meaning the company is generating strong returns on shareholder investment. Coupled with an 8.71% profit margin, Ingredion is doing a solid job at maintaining profitability, even with some recent headwinds.
Valuation and Stock Performance
At a trailing price-to-earnings (P/E) ratio of 13.95 and a forward P/E of 12.15, Ingredion is trading at reasonable levels. These numbers suggest that the stock isn’t overvalued and still has room for potential upside.
Over the last year, the stock has traded between $109.51 and $155.44. It’s currently sitting near its 50-day moving average of $132.54 and its 200-day moving average of $130.96, suggesting it’s in a stable range.
Another key factor is institutional ownership. With nearly 93% of shares held by institutions, major investors clearly have confidence in the company’s long-term prospects. That kind of backing often signals stability and reduced volatility, making Ingredion a more attractive choice for conservative dividend investors.
Risks and Considerations
Even with its strengths, Ingredion isn’t without risks. Investors should keep an eye on a few key concerns.
1️⃣ Revenue and Earnings Pressure – A 6.3% decline in revenue and a 27.5% drop in quarterly earnings growth show that the company is facing some challenges. While Ingredion remains profitable, continued weakness could slow dividend growth.
2️⃣ Commodity Price Fluctuations – The company relies heavily on raw materials like corn and starch, which are subject to price volatility. If costs rise, margins could be squeezed.
3️⃣ Economic Sensitivity – While Ingredion operates in a relatively defensive sector, shifts in consumer demand and economic downturns can impact certain product categories.
4️⃣ Competition – Ingredion faces competition from large players like Archer-Daniels-Midland (ADM) and Tate & Lyle, which means pricing power and market share can be impacted.
Final Thoughts
Ingredion offers dividend investors a solid mix of stability, moderate growth, and financial strength. While its yield isn’t the highest, the company’s conservative payout ratio, strong free cash flow, and history of dividend increases make it a reliable choice for long-term income generation.
The recent dip in revenue and earnings is something to monitor, but with a healthy balance sheet and institutional backing, Ingredion remains a steady dividend payer. Investors looking for a low-volatility income stock with a defensive business model may find Ingredion to be a valuable addition to their portfolio. However, keeping an eye on revenue trends and input costs will be important in assessing its future dividend potential.
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