These types of stocks are often companies that operate in essential sectors, generate massive and consistent cash flow and are run by management teams with a long track record of responsible capital allocation. That’s exactly why Nutrients (TSX:NTR) is a stock I want to hold for the long term.
Nutrien is one of the best stocks to buy and hold for years because it is one of the biggest players in a crucial sector that the global economy simply cannot function without. And as a result, it continues to generate massive amounts of cash, pay a reliable and growing dividend, and reinvest in the long-term growth of the business in a disciplined manner.
So if you’re looking for a high-quality dividend stock that you can buy now and hold for years, here are three reasons why Nutrien is a stock I never plan to sell.
Nutrien operates in an essential industry
Because Nutrien is the largest supplier of crop inputs worldwide, supplying farmers with potash, nitrogen and phosphate, all essential nutrients needed to grow food, it is one of the most reliable companies you can buy.
This isn’t a cyclical consumer product that people can cut back on when times get tough. Global food demand does not disappear during recessions. That makes Nutrien’s underlying activities much more resilient than many investors realize.
Farmers may delay equipment purchases or expansion plans in a poorer economic climate, but they still need fertilizer to maintain crop yields. That steady demand is the basis of Nutrien’s long-term stability.
Its size and dominance provide a huge competitive advantage
Nutrien is not just a fertilizer producer. It is the largest potash producer in the world and one of the largest nitrogen suppliers in the world. That scale is important for both resilience and profitability.
For example, due to its size, Nutrien benefits from lower production costs, better logistics and stronger pricing power than smaller competitors. Moreover, improved operational efficiency helps the country maintain profitability across commodity cycles, while weaker players struggle when prices fall.
In addition, Nutrien’s retail network provides direct access to farmers in North America, South America and Australia. That customer relationship is incredibly valuable and very difficult to replicate.
The activities are vertically integrated
One of the most underrated aspects of Nutrien’s business is its vertical integration. The company not only produces fertilizers. It also distributes them directly to farmers through its vast retail network.
This means that Nutrien creates value throughout the entire supply chain. When commodity prices are strong, the manufacturing sector benefits. When prices are weaker, retail activity helps smooth out profits.
This diversification within the company’s own business model reduces volatility and makes cash flow more predictable. And predictable cash flow is exactly what long-term investors should be looking for.
Furthermore, its size and scale, combined with its vertically integrated operations, provide a significant competitive advantage, which is why it is such a dominant stock in such a defensive sector.
The bottom line
Each of these reasons is compelling in itself and shows why Nutrien is a high-quality broth. However, when you combine them, it becomes clear that Nutrien is a stock you never want to sell.
But in addition to its activities, Nutrien also consistently returns capital to shareholders through dividends and shares buy back.
In fact, in addition to the 3.2% dividend yield that Nutrien offers today, Nutrien also consistently increases that dividend every year.
So if you’re looking for a high-quality and reliable dividend stock to buy now and hold for years to come, Nutrien is certainly one of the best to consider.
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