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Archer Daniels Midland Company (ADM): Get 3.1% Dividend Yield While Waiting For Commodity Prices to Recover

In my view, despite another quarter with disappointing results, Archer-Daniels-Midland Company (NYSE:ADM)’s stock, is still attractive.

Archer-Daniels-Midland, one of the world’s largest agricultural processors and food ingredient providers, is an excellent candidate to be included in diversified large-cap dividend stock portfolio.

The company was included in the equity portfolios of 27 of the investors tracked by Insider Monkey as of December 31, who held 4% of its outstanding shares worth over $867 million. However, ownership was down quarter-over-quarter from 33 investors with long positions at the end of September. David Harding’s Winton Capital, one of the top shareholders of the company’s stock on December 31, slashed its holding by 70% during the first quarter, to 1.35 million shares.

While waiting for a significant rebound in the price of agriculture commodities, investors can enjoy the generous dividend yielding 3.1% a year.

Despite continued low agriculture commodities prices, ADM raised its dividend by 7% on February 2. The company has increased its annual dividend payment to shareholders for 32 consecutive years. This makes Archer-Daniels-Midland one of 50 Dividend Aristocrats. Even during the global economic crisis of the years 2008-2009, ADM continued to grow its dividend.

On May 03, Archer-Daniels-Midland reported its first quarter 2016 financial results, which missed earnings-per-share expectations by $0.03 (6.7%). The company reported revenue of $14,384 million, down 17.8% year-over-year and below consensus of $15,394 million.

ADM missed expectations in its last four quarters after beating estimates in its four previous quarters, as shown in the table below.

ADM EPS Surprise

Data: Yahoo Finance

In the report, ADM Chairman and CEO Juan Luciano, said:

“Challenging market conditions continued in the first quarter, particularly affecting Ag Services. Low U.S. export volumes and weak margins continued, and in the quarter, poor results from the global trade desk impacted results for Ag Services. Results for Corn improved compared to the first quarter one year ago, led by a strong performance in sweeteners and starches. For Oilseeds, global protein demand remained solid. However, first quarter results were impacted by weak global crush margins. WFSI results were in line with expectations.”

 ADM Segment Operating Profit

Source: ADM Quarterly Presentation

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