Dividend Growth Stock Overview: Albemarle Corporation

Albemarle Corporation uses bromine from The Dead Sea in its Polymer Solutions segment.
Photo courtesy tsaiproject/flickr.com.

About Albemarle Corporation

Albemarle Corporation provides specialty chemicals and services to over 2700 customers in nearly 100 countries. Albemarle’s products are used in the energy, consumer electronics, pharmaceutical and automotive industries, among others. Albemarle was incorporated in 1993 and has since grown its operations to nearly 50 facilities worldwide, including chemical production, research and development and administrative facilities.

After reorganizing its business units at the beginning of 2014, the company has three operating segments: Polymer Solutions, Catalysts, and Performance Chemicals.

The Polymer Solutions segment produces flame retardants, stabilizers and curatives. These products are used to enhance the performance of plastics, resins, fuels and lubricants and are sold primarily to lubricant manufacturers, chemical manufacturers and processors.

The Catalysts segment produces catalysts used in refinery operations and to improve the performance of other chemical processes. Customers for the refinery products include the major oil producers including ExxonMobil, Chevron, and TOTAL S.A., and for the performance catalysts include manufacturers of injection molding products, films, and solar cells. The refinery products, which are consumables and need replenishment on a periodic basis, allow for the upgrading of oil fractions to clean fuels by removing sulfur and other contaminants.

The Performance Chemicals segment manufactures chemicals used in oil & gas well drilling, paper manufacturing, water purification, beef and poultry processing, and in disinfectants, sanitizers and biocides. This segment also provides custom chemical manufacturing and research, and manufactures pharmaceuticals, including Ibuprofen, and intermediary agrichemicals used in herbicides, insecticides, and fungicides. Customers for this segment’s products include chemical manufacturers and processor, drilling and oil service companies, water treatment companies, and beef and poultry processors.

The company is became a member of the S&P 500 index in June 2016, and is a member of S&P’s High Yield Dividend Aristocrats index.  The stock trades under the ticker symbol ALB.

As a member of the S&P 500, once Albemarle has increased dividends for 25 consecutive years S&P will classify the company as an S&P Dividend Aristocrat. Given that the company has made a conscious effort to increase the dividend each year for 22 years straight, I expect them to continue to do so. This would put them on track to become a Dividend Aristocrat at the beginning of 2020.

Albemarle Corporation’s Dividend and Stock Split History

Albemarle Dividends

Albemarle has nearly doubled its dividends since 2011.

Albemarle Corporation has increased its dividend payout since 1995. The company pays out its quarterly dividends on the first day of January, April, July, and October; annual dividend increases are announced at the end of February, with the stock going ex-dividend in mid-March. In February 2016, Albemarle announced a 5.2% increase in the quarterly dividend to an annualized dividend payment of $1.22. I expect Albemarle to announce its 23rd annual dividend increase in February 2017.

Albemarle has built a record of good dividend growth with most year-over-year increases in excess of 10% since 1995. From 2010 – 2014, the annual dividend increase was no less than 12%, giving Albemarle a 5-year compounded annual dividend growth rate of 12.73%. This means that the company has nearly doubled its dividend since 2011, from 67 cents to a projected $1.22 per share. Albemarle’s longer-term dividend growth rates are just as respectable. The company has compounded its dividend since 2006 at 13.46% annually and at 12.07% since 1996.

Since beginning its record of dividend growth, Albemarle has split its stock once – a 2-for-1 split in March 2007.

Over the 5 years ending on December 31, 2015, Albemarle stock appreciated at an annualized rate of 1.59%, from a split-adjusted $51.31 to $55.52. This badly underperformed the 10.2% annualized return of the S&P 500 index during this time.

Albemarle Corporation’s Direct Purchase and Dividend Reinvestment Plans

Albemarle Corporation has both direct purchase and dividend reinvestment plans. The fee structure is favorable for investors, with a low minimum purchase amount and no fees on purchases. The minimum purchase amount is $25 for either one-time or recurring investments, and Albemarle covers all the fees on direct investments and dividend reinvestments.

When you sell your shares, you’ll pay a sales commission of between $15 and $30, along with a 10 cent per share transaction fee. There’s an additional cost of $5 to have the proceeds deposited directly to your account. All fees are deducted from the sales amount.

Helpful Links

Albemarle Corporation’s Investor Relations Website

Current quote and financial summary for Albemarle Corporation (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Albemarle

 

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