Updated 3/11/25
The Mosaic Company (MOS) plays a crucial role in the agricultural industry, supplying essential potash and phosphate fertilizers to farmers worldwide. As one of the largest producers in this space, the company’s fortunes are closely tied to global food production and commodity prices.
For dividend investors, Mosaic presents an intriguing mix. The company offers an above-average yield, which can be attractive to income-focused investors. However, its financials tell a more complicated story. Earnings have been volatile, and the dividend payout ratio is higher than what most would consider sustainable. With the stock currently trading near its 52-week low, it’s worth asking: Is this an opportunity for value-seeking investors, or a warning sign that dividends might be at risk?
Key Dividend Metrics
🔵 Dividend Yield: 3.54%
🟢 Forward Dividend Rate: $0.88 per share
🟡 Trailing Dividend Rate: $0.85 per share
🔴 Payout Ratio: 152.73% (well above sustainable levels)
🟠 Ex-Dividend Date: March 6, 2025
🔵 Next Dividend Payment Date: March 20, 2025
Dividend Overview
At first glance, Mosaic’s dividend yield looks appealing at 3.54%, especially considering that its five-year average yield is much lower at 1.56%. This suggests that the stock’s recent decline has made the dividend more attractive from a yield perspective.
The biggest red flag is the payout ratio. At 152.73%, Mosaic is currently paying out significantly more than it earns. That’s an unsustainable trend in the long run. Companies in cyclical industries like agriculture and commodities typically aim to keep their payout ratios lower so they can continue paying dividends even in downturns.
Historically, Mosaic has adjusted its dividend based on earnings strength. If current profitability remains weak, a reduction in the payout wouldn’t be surprising.
Dividend Growth and Safety
Mosaic’s dividend history has been somewhat inconsistent. While the yield has climbed recently, it’s more a result of the stock price dropping rather than strong dividend growth.
The payout ratio alone signals a potential problem. A ratio above 100% means the company is paying more in dividends than it’s generating in earnings. That’s not a sustainable strategy, especially for a company in a highly cyclical sector.
Another factor to consider is the company’s past behavior. When times get tough, Mosaic has been willing to cut its dividend. If profitability doesn’t improve, history may repeat itself.
Chart Analysis
The price action in this chart for Mosaic Company (MOS) tells a story of persistent downward pressure, with some attempts at recovery that haven’t been sustained. The overall trend remains bearish, and the technical indicators provide a deeper look into where the stock stands right now.
Long-Term and Short-Term Trends
The 200-day moving average (blue line) has been in a steady decline, reflecting a prolonged bearish trend. This is a key indicator that investors look at when assessing the overall direction of a stock, and in this case, it suggests that the broader sentiment remains negative.
The 50-day moving average (orange line) has also been trending downward, though it has occasionally flattened out or slightly recovered, showing moments where the stock has attempted to build momentum. However, each time the stock has neared this level, it has struggled to break through, confirming that the shorter-term trend aligns with the longer-term downtrend.
Recent Price Action
The last few weeks have been volatile, with the stock breaking below key levels before bouncing back slightly. The latest close at $24.45 is right near the lower end of the recent range, signaling that buyers stepped in to support the stock, but not with enough strength to push it back toward any significant resistance levels.
A notable move was the sharp decline followed by a strong volume spike, likely signaling panic selling or a large institutional exit. This was followed by a mild recovery, but the stock has yet to reclaim the ground it lost.
Volume and Selling Pressure
Looking at the volume bars, there was a significant spike in selling volume on the recent drop. This suggests that there was strong conviction behind the move lower, rather than a slow bleed downward. The subsequent trading sessions have seen lower volume on the attempted bounce, which isn’t ideal for a sustained recovery.
For a true reversal to happen, buying volume needs to come in stronger than the recent selling. So far, that hasn’t materialized.
Relative Strength Index (RSI)
The RSI indicator is sitting in the lower range, but not yet at extreme oversold levels. This means that while the stock has been under selling pressure, it’s not necessarily at a point where a bounce is inevitable.
There was a slight upward move in RSI as the stock attempted to recover, but unless it starts trending higher and breaking out of the weak zone, this indicator suggests momentum is still weak.
Key Levels to Watch
- Support: The recent low around $22.50 is a key level. If the stock retests this level and breaks lower, it could open the door for further declines.
- Resistance: The $26.00 level, near the 50-day moving average, is the first area where selling pressure has consistently emerged. If the stock can push above this and hold, it would be a more constructive signal.
- Longer-Term Resistance: The 200-day moving average is still well above at around $27.50-$28.00. This will be the ultimate test if the stock can stage a stronger rally.
For now, the stock remains in a downtrend, and the technicals suggest more work is needed before a real shift in sentiment occurs.
Analyst Ratings
Analyst opinions on The Mosaic Company (NYSE: MOS) have varied recently, reflecting both optimism and caution regarding the stock’s future performance.
Recent Upgrades:
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Barclays upgraded Mosaic from “Underweight” to “Equal Weight” on March 5, 2025, setting a price target of $27.
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JPMorgan upgraded Mosaic from “Neutral” to “Overweight,” raising the price target to $29.
Recent Downgrades:
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Mizuho Securities lowered its price target for Mosaic from $29 to $28 while maintaining a “Neutral” rating.
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Wells Fargo reduced its price target from $29 to $26, maintaining a “Hold” rating.
Consensus Price Target:
As of the latest data, the consensus 12-month price target for Mosaic is approximately $31.70, suggesting a potential upside of about 27.49% from the current share price.
These mixed ratings and price targets indicate that analysts are weighing both the challenges and potential opportunities facing Mosaic in the current market environment.
Earnings Report Summary
Mosaic’s latest earnings report showed a mix of resilience and ongoing challenges. The company posted a net income of $169 million for the fourth quarter of 2024, with adjusted EBITDA coming in at $594 million. While strong phosphate prices helped support earnings, lower sales volumes and some operational setbacks put pressure on results.
Potash Performance
The potash segment brought in $109 million in operating earnings for the quarter. Mosaic has been investing in its production capabilities, completing a compaction project that added 500,000 tons of capacity. Another project in the works, using hydrofloat technology, is expected to contribute an additional 400,000 tons per year. Looking ahead, potash demand remains solid, especially with global crop prices staying high and ongoing supply constraints due to geopolitical factors.
Phosphate Market Dynamics
Mosaic’s phosphate business turned in a smaller profit, reporting $8 million in operating earnings. The company is working to bring its U.S. phosphate production back to historical levels, targeting between 7.2 and 7.6 million tons in 2025. The market for phosphate fertilizers is expected to stay tight, thanks to rising demand and limited supply. This should help support pricing in the near future.
Growth in Brazil
Mosaic Fertilizantes, which operates in Brazil, had a strong quarter with an adjusted EBITDA of $82 million. The company is focused on improving efficiency and reducing costs, already benefiting from a $522 million gain from the sale of non-core assets. Plans are in place to cut another $150 million in costs, setting the stage for improved profitability going forward.
Operational Progress
The company saw record production at its Belle Plaine potash mine, which reached full operating capacity after resolving some electrical issues earlier in the year. Meanwhile, Mosaic Biosciences, a growing part of the business, doubled its revenue and acreage in 2024, with similar growth expected in 2025.
Looking Ahead
Mosaic is optimistic about the agricultural market’s strength heading into 2025. High crop prices and tight fertilizer supplies should continue supporting demand. The company remains focused on cutting costs, already making significant progress on its $150 million savings target.
Overall, while the quarter had its ups and downs, Mosaic is making the right moves to position itself for a stronger year ahead. The focus on improving operations and managing costs should help the company navigate the challenges of a volatile fertilizer market.
Financial Health and Stability
Mosaic’s financials show some strengths but also areas of concern.
- Revenue (TTM): $11.12 billion
- Operating Cash Flow (TTM): $1.3 billion
- Total Debt: $4.45 billion
- Total Cash: $272.8 million
- Debt-to-Equity Ratio: 38.31%
The good news is that Mosaic is generating positive cash flow, which helps support dividend payments. However, its balance sheet tells a different story. With over $4.45 billion in debt and only $272.8 million in cash, the company doesn’t have much flexibility if market conditions worsen.
The revenue trend is also concerning. Revenue is down 10.6% year-over-year, and quarterly earnings have dropped 53.7%. Those aren’t numbers that inspire confidence, especially when dividends depend on profitability.
Valuation and Stock Performance
At a market cap of $7.89 billion, Mosaic sits in the mid-cap range. The valuation metrics suggest the stock is trading at a discount compared to historical levels, but there are reasons for that.
- Trailing P/E: 45.24 (indicates weak earnings relative to price)
- Forward P/E: 11.57 (suggests improvement is expected)
- Price/Book: 0.69 (trading below book value, could be undervalued)
Mosaic’s stock has been in a downtrend, losing more than 20% over the past year. Right now, the price is hovering near its 52-week low of $22.48. The stock’s 50-day moving average sits at $26.11, while the 200-day moving average is at $27.04, further indicating a downward trend.
The low price-to-book ratio suggests the stock could be undervalued relative to its assets. However, valuation alone isn’t enough to make a stock a strong dividend investment. The ability to generate consistent earnings is just as important.
Risks and Considerations
Mosaic operates in an industry that’s highly dependent on external factors, which can make earnings unpredictable. Some key risks to consider:
- Earnings Volatility: Fertilizer prices are driven by global demand, input costs, and agricultural cycles. When prices drop, Mosaic’s earnings follow.
- Debt Load: With over $4.45 billion in debt, Mosaic must prioritize debt payments, which can limit its ability to sustain dividends during downturns.
- Dividend Sustainability: The 152.73% payout ratio is a clear warning sign that the dividend may not be sustainable if earnings don’t rebound soon.
- Stock Price Weakness: A declining stock price can sometimes signal an opportunity, but it can also reflect deeper issues in the business. Investors need to assess whether the recent decline is temporary or part of a longer-term trend.
- Macroeconomic Factors: Inflation, interest rates, and global food supply issues all play a role in Mosaic’s profitability.
Final Thoughts
For dividend investors, Mosaic presents a mixed picture. The yield is solid at 3.54%, and the stock looks cheap based on its price-to-book ratio. But that’s only part of the story. The company’s payout ratio is unsustainable, and recent earnings declines suggest that unless profitability improves, maintaining the current dividend could be a challenge.
This isn’t the kind of stock that offers a smooth, reliable income stream. Instead, it’s a cyclical play that could reward investors when fertilizer prices rise again—but could also disappoint if earnings remain weak.
The next few quarters will be key in determining whether Mosaic can stabilize its earnings and keep its dividend intact. Investors should watch for any updates on profitability and management’s approach to capital allocation. A dividend cut isn’t guaranteed, but based on the numbers, it wouldn’t be surprising.
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