Dividend Aristocrats In Focus: Albemarle Corporation

Up to date on March twelfth, 2025 by Nathan Parsh

Annually, we overview the entire Dividend Aristocrats. Attaining membership to this group is troublesome: corporations have to be of a sure dimension, belong to the S&P 500 Index, and (most significantly) have not less than 25 consecutive years of dividend development.

There are simply 69 Dividend Aristocrats, proving the exclusivity of the record.

You possibly can obtain an Excel spreadsheet of all 69 Dividend Aristocrats, together with essential monetary metrics comparable to P/E ratios and dividend yields, by clicking the hyperlink beneath:

Disclaimer: Positive Dividend will not be affiliated with S&P International in any approach. S&P International owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet is predicated on Positive Dividend’s personal overview, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s based mostly. Not one of the data on this article or spreadsheet is official information from S&P International. Seek the advice of S&P International for official data.

Albemarle Company (ALB) joined this unique record in 2020. The corporate is among the most risky names among the many Dividend Aristocrats, however this makes its dividend development streak much more spectacular.

This text will overview Albemarle’s funding prospects.

Enterprise Overview

Albemarle is the biggest producer of lithium and second-largest producer of bromine on this planet. The 2 merchandise account for the overwhelming majority of annual gross sales. Albemarle produces lithium from its salt brine deposits within the U.S. and Chile.

The corporate has two joint ventures in Australia that additionally produce lithium. Albemarle’s Chile belongings supply a really low-cost supply of lithium. The corporate operates in practically 100 nations.

Starting January 1st, 2023, the corporate reorganized into the next segments: Vitality Storage, Specialties, and Ketjen.

Albemarle produces annual gross sales above $5 billion.

Supply: Investor Presentation

On February twelfth, 2025, Albemarle introduced fourth-quarter and full-year 2024 outcomes. For the quarter, income declined 48% to $1.23 billion, which was $110 million lower than anticipated. Adjusted earnings-per-share of -$1.09 in contrast very unfavorably to $1.85 within the prior 12 months, which was $0.42 beneath estimates.

For the 12 months, income declined 44% to $5.4 billion, whereas adjusted earnings-per-share have been—$2.34 in comparison with $22.25 in 2023. It must be famous that the corporate had practically $10 billion in gross sales in 2023, serving to as an instance that huge swings within the enterprise can happen quickly.

Decrease lithium costs as soon as once more negatively impacted outcomes. For the quarter, income for Vitality Storage decreased 63.2% to $616.8 million. Quantity declined 10%, whereas costs have been down 53%.

Specialties revenues have been decrease by 2.0% to $332.9 million, as a 3% enchancment in quantity was offset by a value lower. Ketjen gross sales of $245 million have been down 17.4% from the prior 12 months, as a slight value improve was greater than offset by weakening quantity.

Albemarle offered an outlook for 2025 as nicely, with the corporate anticipating income in a spread of $4.9 billion to $5.2 billion. The corporate is anticipated to provide earnings-per-share of -$0.80 in 2025. We imagine that Albemarle has earnings energy of $3.50.

Progress Prospects

Outcomes are anticipated to be nicely above prior numbers, and Albemarle stands to profit from the elevated gross sales of electrical autos, as the corporate’s lithium is used to supply the batteries.

Lithium is anticipated to be a development section over the subsequent 5 years on account of growing demand for a variety of functions, together with electrical autos and shopper electronics.

Supply: Investor Presentation

Demand for vitality storage tends to fluctuate, however the future appears promising for electrical autos as extra shoppers contemplate making that buy. By 2035, electrical autos are projected to account for 26% of all automobiles on the street within the U.S. Battery dimension can also be anticipated to develop.

With this development will come a major improve in demand for lithium.

Attributable to its management positions in lithium and bromine, we imagine the corporate can develop earnings per share at a charge of seven.5% yearly for the subsequent 5 years.

Aggressive Benefits & Recession Efficiency

Regardless of being amongst world leaders in a number of companies, Albemarle isn’t content material to relaxation on its earlier success. The corporate has been energetic in buying companies that strengthen its market share.

Albemarle will not be a recession-proof firm. Listed beneath are the corporate’s earnings-per-share throughout and after the final recession:

• 2007 earnings-per-share of $2.41
• 2008 earnings-per-share of $2.40 (0.4% lower)
• 2009 earnings-per-share of $1.94 (19% improve)
• 2010 earnings-per-share of $3.51 (45% improve)

The specialty chemical enterprise is closely reliant on buyer demand. Decrease demand leads to decrease pricing, which negatively impacts Albemarle’s efficiency. The corporate is prone to face an identical kind of slowdown through the subsequent recession.

That mentioned, the corporate has sturdy aggressive benefits. A key aggressive benefit is that it ranks as the biggest producer of lithium on this planet. The steel is utilized in batteries for electrical automobiles, prescribed drugs, airplanes, mining, and different functions.

Albemarle can also be a prime producer of Bromine, which is used within the electronics, development, and automotive industries. The corporate possesses a dimension and scale that others can’t match.

Traders inquisitive about investing in Albemarle ought to perceive that possession of the inventory comes with dangers as a result of nature of its business.

Valuation & Anticipated Returns

Utilizing our anticipated earnings energy determine of $3.50 for the 12 months, ALB shares have a price-to-earnings ratio of 20.9. During the last decade, Albemarle has traded with a mean price-to-earnings ratio of 21.3.

Our a number of goal is 18x earnings, which we really feel takes under consideration the demand for the corporate’s supplies and the excessive volatility of lithium costs. If the inventory have been to commerce with this goal by 2030, then valuation can be a 2.9% headwind to annual returns over this time interval.

As well as, the dividend yield of two.2% will add to shareholder returns. The dividend payout is well-covered, because the projected payout ratio for the 12 months is simply 46% of our earnings energy estimate.

Given the character of its enterprise, the corporate has been profitable at prudently managing its dividend. Albemarle has raised its dividend for 29 consecutive years.

Due to this fact, we venture that Albemarle will present a complete annual return of 6.6% over the subsequent 5 years, stemming from 7.5% earnings development and a beginning yield of two.2% which can be offset by a low single-digit headwind from a number of contraction.

Ultimate Ideas

Reaching Dividend Aristocrat standing isn’t any small feat. Albemarle is the dominant participant within the lithium business. The corporate advantages from low-cost mines and its management place in a number of classes.

Albemarle is way from recession-proof and has skilled some vital earnings declines during the last decade, however this makes the corporate’s dividend development observe report much more spectacular.

Whereas the corporate’s enterprise will be unpredictable, we charge Albemarle’s shares as a maintain.

Moreover, the next Positive Dividend databases include probably the most dependable dividend growers in our funding universe:

In case you’re on the lookout for shares with distinctive dividend traits, contemplate the next Positive Dividend databases:

The most important home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month: