There’s plenty of money to be made in the so-called “value add.” Turning raw materials and ingredients into other specialty products for manufacturers is a lucrative business. And those firms that do it at scale — such as our latest Best Dividend Capture Stocks List pick — can create a wide moat that generates significant cash flows. In fact, our pick’s moat has delivered strong dividend growth for over 13 years, thanks to its position as a leader in “value add.”
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
You may be wondering where exactly our pick provides value add? The answer is in food and consumer products. Our pick produces the necessary ingredients to make food and other products taste good and have certain textures. The secret is that our pick doesn’t physically harvest corn or sugarcane — it purchases those relatively low-cost items and then processes them into other products. These ingredients, sweeteners, thickeners and other food-based products come with higher margins and prices. And since many of these items are must-haves for various other producers, our pick is able to realize plenty of pricing power and steady cash flows.
The win is that our pick has been able to move beyond the commodity-like nature of its core business with other value-added products. New forays into plant-based proteins, starch-based textures and non-sugar sweeteners have added additional higher-margined products to its revenue mix. Our pick has also been able to score extra revenue through its ESG efforts. By helping other manufacturers meet their ESG goals, our pick has been able to derive additional sources of revenues.
The end result is that our pick has been able to build on its long history and become a payout machine while raising its dividend over the long haul.
With that, investors have taken notice. Our pick’s leadership position in food-based, value-added ingredients has made it a great dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Monday, July 1, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 4.2 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our agriculture solutions pick could be a lucrative option.
