Updated 3/11/2025
Nutrien Ltd. is a global leader in crop nutrients, playing a vital role in feeding the world. As the largest producer of potash and a key supplier of nitrogen and phosphate fertilizers, the company operates at the heart of the agricultural industry. Farmers depend on Nutrien’s products to maximize yields, making the company an essential part of the global food supply chain.
But like any business tied to commodity prices, Nutrien experiences swings in profitability. When demand for fertilizers is high, revenues and earnings climb. When prices weaken, the company faces financial pressure. This cyclical nature is something investors—especially those focused on dividends—need to consider.
For income investors, the big question is whether Nutrien’s generous dividend can withstand the ups and downs of the industry. Let’s take a deeper look.
Key Dividend Metrics
🔹 Dividend Yield: 4.26% (higher than its 5-year average)
📆 Next Dividend Payment: April 10, 2025
📉 Ex-Dividend Date: March 31, 2025
💰 Annual Dividend: $2.18 per share
📈 Dividend Growth Rate (5-Year Avg.): ~5.5%
⚖️ Payout Ratio: 158.82% (a potential warning sign)
🛑 Earnings Growth: -34.3% YoY (puts pressure on future payouts)
💵 Free Cash Flow: $1.36B (provides some support for dividends)
Dividend Overview
At first glance, Nutrien’s dividend looks very appealing. A yield above 4% is a solid income stream, and the company has a track record of steady payments. But when you dig into the numbers, a few concerns emerge.
The biggest red flag is the payout ratio, which has climbed to 158.82%. That’s well above what’s considered sustainable. Normally, a healthy company keeps its payout ratio under 75% to ensure it can continue funding dividends without stretching its finances. In Nutrien’s case, it’s paying out more than it’s earning—a sign that the current dividend may not be safe if earnings don’t rebound soon.
Still, Nutrien has a strong cash flow position, which means it can support its dividend in the short term. But investors should keep an eye on profitability. If earnings don’t recover, the company may have to adjust its payout to align with reality.
Dividend Growth and Safety
Nutrien has steadily increased its dividend over the years, with an average growth rate of around 5.5% annually. That’s a good sign of management’s commitment to rewarding shareholders.
But here’s the challenge: dividends need to be backed by earnings growth, and right now, Nutrien’s earnings are moving in the wrong direction. A 34.3% drop in quarterly earnings year-over-year is a major concern. If this trend continues, a dividend cut may not be off the table.
There’s also the issue of the company’s industry. Fertilizer prices don’t move in a straight line—they’re tied to global crop demand, weather conditions, and geopolitical factors. When times are good, Nutrien thrives. But when demand weakens, revenues and profits can take a hit. That kind of unpredictability makes it harder to rely on dividend growth long-term.
The good news? Nutrien still generates strong free cash flow, which acts as a cushion for dividend payments. If the company can stabilize earnings and improve its payout ratio, the dividend could remain intact. But for now, the numbers suggest that the company may be stretching to maintain its current payout.
Chart Analysis
Looking at the recent price action of Nutrien Ltd. (NTR), there are some notable developments taking shape. The stock has been in a downtrend for much of the past year, but there’s been a shift in momentum recently. With price now trading above the 50-day moving average and flirting with the 200-day moving average, there are signs of a potential trend change. However, there are still some hurdles to clear before calling it a full reversal.
Moving Averages and Trend Shifts
The 50-day moving average (light blue) has been sloping upward in recent weeks, suggesting that short-term momentum is improving. The stock has managed to climb above this level, which can often act as dynamic support during an uptrend. The 200-day moving average (dark blue), however, remains relatively flat to slightly downward-sloping, indicating that the longer-term trend is still uncertain.
Recently, price action has been hovering around this 200-day moving average. Breaking and holding above it could signal a more convincing shift into a bullish phase, while a failure to stay above may mean continued choppiness or even a retest of prior lows.
Volume and Buying Interest
Volume has been relatively steady, with occasional spikes that hint at stronger participation during certain price moves. One of the more noticeable volume surges happened back in August, which coincided with a sharp price decline. That kind of volume-driven selloff often reflects institutional unloading. Since then, volume has been more balanced, but it’s still worth keeping an eye on any sudden spikes that might indicate the next big move.
More recently, there has been an increase in green volume bars, which suggests that buyers are stepping in. However, it’s not an overwhelming surge, meaning conviction is moderate at best. Ideally, a breakout above the 200-day moving average would come with stronger volume, confirming that there is real demand supporting the price move.
Relative Strength Index (RSI) and Momentum
The RSI indicator at the bottom of the chart shows that momentum has been improving but is not yet in overbought territory. This is generally a healthy sign—stocks that grind higher with an RSI in the 50-70 range tend to have more sustainable moves than those that shoot straight into overbought conditions.
That being said, the RSI was higher in late February and has since flattened out. This suggests that while the stock has been climbing, some of that bullish momentum is cooling off. If RSI starts heading lower while price remains stagnant or even moves up slightly, that could be an early warning sign of weakening strength.
Price Action and Recent Candlesticks
The last few candlesticks indicate some indecision in the market. The latest candle shows a small-bodied bar with both upper and lower wicks, meaning there was some back-and-forth movement throughout the day. This often signals that buyers and sellers are relatively balanced at the current level.
Looking back a few days, the stock recently had a strong push higher, followed by a pullback and a retest of the 50-day moving average. This is a fairly standard pattern—when price breaks through a key moving average, it often comes back to test it before making another leg higher. The key now is whether buyers step in again to push price higher, or if the stock starts fading back below these support levels.
Analyst Ratings
📊 The latest analyst ratings for Nutrien Ltd. (NTR) present a mixed outlook, reflecting both optimism and caution. The consensus price target among analysts is $59.27, suggesting potential upside from current levels. However, opinions remain divided based on macroeconomic factors and industry trends.
🔼 Upgrades
📈 Piper Sandler recently upgraded Nutrien from “Underweight” to “Overweight,” raising its price target to $58. Analysts cited expectations of improved fertilizer demand, driven by recovering agricultural markets and higher crop prices. The firm believes that Nutrien’s earnings could see a boost as global food supply constraints increase the need for higher crop yields.
📊 JPMorgan also revised its stance, moving from “Underweight” to “Neutral.” Their analysts pointed to stabilizing commodity prices and Nutrien’s strong cash flow position, which could help sustain dividend payouts and capital investments in the near term.
🔽 Downgrades
⚠️ Barclays took a more cautious stance, downgrading Nutrien from “Overweight” to “Equal-Weight” and adjusting the price target from $55 to $56. The primary reason was concern over weakening agricultural demand, which could weigh on fertilizer sales and profitability. The firm noted that while Nutrien remains a dominant player in the industry, near-term headwinds may limit upside potential.
📉 UBS followed suit, lowering its rating to “Neutral” and cutting its price target to $51. Analysts pointed to continued margin pressures and uncertainty in the global fertilizer market. Slower-than-expected recovery in pricing could challenge Nutrien’s ability to grow earnings, leading to a more conservative outlook.
🔍 The overall takeaway from these ratings is that while Nutrien has long-term potential, near-term volatility in the fertilizer market is creating divided opinions. Analysts are keeping a close watch on demand trends, commodity pricing, and the company’s ability to navigate a challenging macroeconomic environment.
Earnings Report Summary
Nutrien’s latest earnings report painted a picture of a company navigating a tough market but staying steady in its approach. The numbers weren’t the most exciting, but they weren’t all bad either. There were clear challenges, especially with lower fertilizer prices, but also some bright spots in specific areas of the business.
Fourth Quarter 2024 Highlights
For the final stretch of the year, Nutrien posted net earnings of $118 million, which works out to $0.23 per share. Adjusted EBITDA came in at $1.1 billion, reflecting the reality of a market that’s been anything but predictable. While demand for fertilizer remains strong in the long run, price fluctuations have made the past few months more challenging.
Full-Year Performance
Looking at the full year, Nutrien pulled in $700 million in net earnings, or $1.36 per share. Adjusted EBITDA for 2024 totaled $5.4 billion. Compared to previous years, these numbers are down, mostly due to lower selling prices in key segments like potash and phosphate. That being said, the company remains in a strong position, and there’s confidence that the market will stabilize going forward.
Breaking It Down By Segment
- Retail (Nutrien Ag Solutions): This division saw a nice bump, with adjusted EBITDA growing 16% to $1.7 billion. Higher product margins and solid cost management played a role in keeping things moving in the right direction.
- Potash: Even though sales volumes increased to 13.9 million tonnes, adjusted EBITDA dropped by 25% to $1.8 billion. The reason? Prices just weren’t as strong as they were the year before.
- Nitrogen: This segment remained relatively steady, with adjusted EBITDA landing at $1.9 billion. Better production and lower natural gas costs helped keep this area from sliding too much.
- Phosphate: This was a tougher spot for the company. Adjusted EBITDA fell 18% to $384 million, with sales volumes dipping to 2.4 million tonnes. Weather disruptions and weaker industrial demand played a big role in the decline.
Despite the earnings dip, Nutrien didn’t hold back on returning money to shareholders. The company paid out $1.2 billion through dividends and share buybacks. On top of that, the board approved an increase in the quarterly dividend to $0.545 per share and signed off on a plan to repurchase up to 5% of outstanding shares.
2025 Outlook and Guidance
Looking ahead, Nutrien expects demand for grain to stay strong, which should support better pricing for fertilizers. In North America, more corn planting and a shorter fall application season could drive up demand for their products.
For 2025, the company is setting expectations for:
- Retail adjusted EBITDA between $1.65 and $1.85 billion
- Potash sales of 13.6 to 14.4 million tonnes
- Nitrogen sales of 10.7 to 11.2 million tonnes
- Phosphate sales of 2.35 to 2.55 million tonnes
- Capital expenditures between $2.0 and $2.1 billion
Overall, Nutrien is in a transition period, working through pricing challenges while maintaining strong fundamentals. With a focus on efficiency and market demand, the company seems prepared to adapt to whatever the next year brings.
Financial Health and Stability
For a dividend to be sustainable, the company needs a strong financial foundation. Nutrien has some positives, but there are also risks to consider.
✔ Revenue for the past year totaled $25.02 billion, but it’s down 10% compared to last year. A declining top line isn’t ideal, especially for a business that relies on volume and pricing strength.
✔ Operating cash flow remains solid at $3.54 billion, which provides flexibility. Even with declining earnings, this gives Nutrien some breathing room to cover dividends and other obligations.
❌ Debt is a concern. Nutrien has $12.81 billion in total debt and a debt-to-equity ratio of 52.4%. That’s a significant load, and if interest rates remain high, refinancing could become expensive.
❌ Profitability metrics are weak. Return on equity (ROE) is just 2.82%, which means the company isn’t generating strong returns for shareholders. A low ROE usually signals that capital isn’t being used as efficiently as it could be.
✔ The company’s book value per share stands at $49.71, which is close to the current stock price. That suggests shares aren’t overvalued based on assets, which could provide some downside protection.
Overall, Nutrien has the financial strength to navigate short-term challenges, but its debt load and earnings decline are factors dividend investors should monitor closely.
Valuation and Stock Performance
Nutrien’s stock is currently trading at $51.18, within a 52-week range of $43.69 to $60.87. It’s been a volatile ride, reflecting both the ups and downs of the fertilizer market.
From a valuation perspective, the numbers send mixed signals.
- Trailing P/E (past earnings): 37.63 (high, which suggests overvaluation)
- Forward P/E (future earnings estimates): 13.26 (more reasonable, assuming recovery)
- Price-to-Book Ratio: 1.03 (indicating fair valuation relative to assets)
- Enterprise Value/EBITDA: 8.81 (within a normal range for industrial stocks)
If earnings bounce back, Nutrien could be attractively priced. But with current profitability under pressure, the stock may not be as cheap as it seems at first glance.
Risks and Considerations
🔸 Earnings Decline: The company’s 34.3% drop in quarterly earnings is a real concern. If this trend continues, it could impact dividends and stock performance.
🔸 Commodity Price Volatility: Nutrien’s business is tied to global fertilizer prices, which fluctuate based on factors beyond the company’s control. This cyclical nature makes earnings unpredictable.
🔸 High Debt Load: With $12.81 billion in debt, interest expenses could eat into profits if borrowing costs rise.
🔸 High Payout Ratio: At 158.82%, Nutrien’s dividend is not sustainable in the long run unless earnings recover. Investors should be prepared for the possibility of a cut if financial pressures persist.
🔸 Macroeconomic Headwinds: Global trade policies, food demand, and geopolitical issues all impact Nutrien’s business. Any major disruptions could weigh on earnings.
Final Thoughts
For dividend investors, Nutrien presents an interesting case. The 4.26% yield is appealing, especially for those seeking income. But the high payout ratio and declining earnings raise questions about sustainability.
Right now, Nutrien is in a tough spot. The business itself is strong, and cash flows provide some stability. But unless earnings improve, the company may have to make tough decisions about its dividend. Investors should be aware of the risks and keep a close watch on financial trends.
For those willing to ride out the volatility, Nutrien could still be a solid long-term investment. But income-focused investors looking for stability may want to be cautious and ensure they’re comfortable with the potential for dividend changes in the future.
Recent Comments