DuPont (NYSE:DD) shares have gotten hit in the past few months because of warnings that profits will suffer as a result of depressed TiO2 pricing. Titanium Dioxide, TiO2, is used as white pigment in everything from auto paints to food colorings.
The table below summarizes each division and how much of the total profits they accounted for in the first 9 months of 2012.
|9 month Pre-tax OI ending CY2012 Q3|
|Division||Percentage of OI|
|Performance Chemicals (including Titanium Dioxide)||32.2%|
|Safety & Protection||6.2%|
|Nutrition & Health||6.1%|
|Electronics & Communications||2.6%|
As you can see, their Performance Chemicals division does make up a large percentage of the company's earnings. The largest portion of earnings comes from their agricultural division which produces crop protection products (pest control, herbicide, etc) and seeds. DuPont is a major international participant in the agricultural field and should see growth resulting from the growing need for food around the world.
DuPont currently pays a dividend of $1.72 per year, yielding 3.85%. Over the past 10 years, the yield has averaged roughly 4% and the company has paid dividends consistently since 1904.
Over that same 10-year period, the company has shrunk the share count by over 6% and announced a new $1 billion buyback in early December. If that buyback is completed in 2013, as the company suggests, they will reduce their share count by an additional 2%. These factors result in a total return of 53% for the company stock over the past 10 years.
The recent price drop resulting from weakness in their Performance Chemicals division presents a great opportunity to buy a shareholder-friendly company to hold for long term slow but steady growth. Pick up shares while they are on sale.
Disclosure: I am long DD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.