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Archer Daniels Midland: A Dividend Aristocrat Trading At Some Of The Best Valuations In 20 Years

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Simply Safe Dividends

Historically, dividend growth investing has been one of the best ways for regular people to compound their wealth and income over time.

Of course, the trick is to be able to carefully select the best quality companies, those with high-quality management teams, strong balance sheets, predictable businesses, and dividend-friendly corporate cultures.

That's why dividend aristocrats have become a favorite among income investors, because with their long-term (25+ years) streaks of annual dividend growth, aristocrats can be a great starting place to look for the kind of steady blue chips that have done so well in the past.

Investors can learn more about all of the dividend aristocrats here.

Let's take a look at Archer Daniels Midland (NYSE:ADM), one of the oldest and most time-tested members of this group (with 41 straight years of payout growth to its name), to see if this boring agricultural giant might be appropriate for a diversified dividend growth portfolio. Especially with shares offering a dividend yield that is near its highest level in 20 years.

Business Overview

Founded in 1898 in Chicago, Illinois, Archer Daniels Midland is one of the world's largest food procurers, transporters, storage, processors, and sellers of agricultural commodities and products through its global network of processing plants, storage facilities, and transportation vehicles.

Or more simply put, ADM helps to feed the world, thanks to its immense business and geographic diversification. Some of the company's end products include vegetable oil, protein meal, flour, corn sweeteners, starch, ethanol, and other food and feed ingredients.

Source: Archer Daniels Midland Investor Presentation

The company has four main business segments:

  • Oilseeds Processing (46% of operating profits in Q1 2017): Processes soybeans and soft seeds into vegetable oils and protein meals. These products can be sold "as is" or further processed into salad oils, margarine, and more.

This article was written by

Simply Safe Dividends profile picture
Simply Safe Dividends helps conservative dividend investors increase current income, make better investment decisions, and avoid risk. Brian Bollinger, a registered CPA, runs Simply Safe Dividends and previously worked as an equity research analyst at a multibillion-dollar investment firm.

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