Entering text into the input field will update the search result below

Archer Daniels: Stuck Between Dividend Growth And Lack Of Consistent Results

The Dividend Guy profile picture
The Dividend Guy


  • The company has been increasing its dividend payments for the past 42 years.
  • Nonetheless, both its revenues and earnings are highly volatile.
  • The need for diversification and additional growth vectors is crucial for the future.

Investment Thesis

Archer-Daniels Midland (NYSE:ADM) is a strong dividend grower with 42 consecutive payment increases. Management has proven over the years its capacity of managing cash flow in order to reward shareholders even during a down cycle. However, the stock price hasn’t generated much return over the past 10 years. The company is struggling to improve their revenues on a consistent basis. Demographics, emerging markets, along with stronger diversification may help ADM finding growth vectors for the next decade. ADM is currently fairly priced and offers an attractive dividend yield at over 3%. Let’s dig deeper into Archer-Daniels Midland.

Understanding the Business

ADM is more or less the “middleman” between farmers and food companies. It specializes in buying, processing and selling back commodities (mainly oilseeds and corn).

Source:ADM November 2016 investor presentation

Source:ADM November 2016 investor presentation

ADM benefits from its large size to generate economies of scale and the recent acquisition of Wild Flavor could become a great way to diversify from its core business.


Source: Ycharts

As revenue stagnated between 2012 and 2014 and decreased to 2010 level afterwards, there is a feeling of emergency growing. Management is making an effort to diversify its core business model through acquisitions and investments. ADM is now active in the cocoa and chocolate business, lactic and acid business, South American fertilizer and Brazilian sugarcane ethanol. In 2014, ADM announced the acquisition of Switzerland-based Wild Flavor. The purpose was to use ADM processing capability and create synergy with Wild Flavor to create additional ingredients.

“Natural flavor and ingredients is one of the largest and fastest-growing consumer trends in both developed and emerging markets, and WILD Flavors is the world’s leading provider of natural flavor systems to the food and beverage industry,” ADM chairman and chief executive Patricia Woertz said in a statement. (source:

This article was written by

The Dividend Guy profile picture
My name is Mike and I’m the author of The Dividend Guy Blog & The Dividend Monk along with the owner and portfolio manager here at Dividend Stocks Rock (DSR). I earned my bachelor degree in finance-marketing, own a CFP title along with an MBA in financial services. Besides being a passionate investor, I’m also happily married with three beautiful children. I started my online venture to educate people about investing and to be able to spend more time with my family. I started my career in the financial industry back in 2003. I earned several promotions along with a good pile of diplomas. I had lots of fun working with clients in private banking for half a decade, but thought I could do more with my life. In 2016, I decided to take a leap of faith and left everything behind to travel across North America and Central America with my family. We drove through nine countries and stayed three months in Costa Rica before returning home. This was an eye-opening adventure that led me in 2017 to quit my job in the financial industry and pursue my dream; helping others with their personal finance through my investing websites. You just found the reason why I quit my suit & tie job!

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.