We recently compiled a list of the 10 Best Beaten Down Dividend Stocks to Invest in Now. In this article, we are going to take a look at where Nutrien Ltd. (NYSE:NTR) stands against the other beaten down dividend stocks.

Dividend stocks have faced challenges over the past year due to the rising focus on tech stocks. However, the value of income remains strong, and investors haven’t overlooked dividend equities. As a result, US companies are now more focused on dividends, offering substantial payouts to shareholders. In fact, many tech companies have begun issuing dividends this year, thanks to strong cash flow on their balance sheets. While they could reinvest in growth, sharing profits with shareholders has become an appealing strategy to attract investors.

This means that with the changing market dynamics, high-quality companies with strong balance sheets that are trading at lower multiples have become more appealing. Dividend stocks often fall into this category, as they typically have stable business models and cash flows that allow them to consistently return earnings to investors. Dan Lefkovitz, a strategist for Morningstar Indexes, also highlighted this in the firm’s latest report:

Another factor influencing the market trends is the Fed’s anticipated rate cuts. Investors believe the Fed is likely to start lowering interest rates in September, marking the beginning of a new easing cycle after one of its most aggressive tightening phases. The central bank began raising rates in March 2022 in response to soaring inflation, and they’ve remained at restrictive levels since July 2023. According to popular belief, dividend investors might benefit as rates decline. Lower rates can reduce bond yields, making dividend yields more appealing by comparison. In addition, companies with higher debt, such as utility companies and REITs, often benefit from falling rates and are typically among dividend payers.

If we set aside the impact of interest rates on dividend stocks, it becomes clear that they have made a substantial contribution regardless of market conditions. According to a study by S&P Dow Jones Indices, from 1926 to July 2023, dividends accounted for 32% of the broader market’s monthly total return, with the rest coming from capital appreciation. The report also underscored the power of compounding dividends. Without dividends, an initial investment in the stock market on January 1, 1930, would have grown to $214 by July 2023. However, with dividends reinvested, that same investment would have soared to $7,219 over the same period.

While there are encouraging signs for dividend stocks, they have struggled to keep pace with the broader market this year. The Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, has gained nearly 9% in 2024, compared with over 16.5% return of the broader market. With this, we will take a look at some of the best beaten down dividend stocks to invest in.

Our Methodology:

To compile this list, we began by examining stocks that have experienced a decline from their peak prices within the past three years. From this pool, we selected 10 dividend-paying stocks that have witnessed a drop of 25% or greater in their share prices over these three years. The rankings within the list are based on the extent of the decrease in share prices from their three-year highs to their current levels, with the list arranged in ascending order of these declines as of August 30, 2024.

We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 912 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

A close-up of a farmer's hands sowing a field of organic grains with crop inputs.

Nutrien Ltd. (NYSE:NTR)

3-year high-to-low share price decrease as of August 30: 53.9%

Nutrien Ltd. (NYSE:NTR) is a Canadian fertilizer company and is also one of the largest producers of potash in the world. The stock is down by nearly 54% from its three-year high mainly because of rising inflation. Moreover, fluctuating commodity prices and rising production costs have significantly impacted the company’s declining performance. In the second quarter of 2024, the company generated over $9.9 billion in revenues, which fell by 13% from the same period last year. The revenue also missed analysts’ consensus by $817 million.

Despite these challenges, Nutrien Ltd. (NYSE:NTR) has shown confidence in its operations throughout the quarter. The company benefited from improved retail margins, increased fertilizer sales volumes, and lower operating costs during the first half of 2024. With strong demand for crop inputs, Nutrien raised its full-year forecast for global potash demand, backed by strong engagement in all major markets. Although the company has $13.37 billion in debt as of the most recent quarter with a debt-to-equity ratio of 0.53, this shouldn’t worry income investors, as its cash generation remains strong. In the second quarter of 2024, the company reported $1.8 billion in operating cash flow and distributed $266 million to shareholders through dividends.

Nutrien Ltd. (NYSE:NTR), one of the best dividend stocks, has raised its payouts for five years in a row. The company offers a quarterly dividend of $0.54 per share and has a dividend yield of 4.55%, as of August 30.

According to Insider Monkey’s database of Q2 2024, 35 hedge funds held stakes in Nutrien Ltd. (NYSE:NTR), up from 33 in the previous quarter. Their total stake value is more than $386.4 million. With over 9.4 million shares, First Eagle Investment Management was the company’s largest stakeholder in Q2.

Overall NTR ranks 4th on our list of the best beaten down dividend stocks to invest in now. While we acknowledge the potential for NTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.