Published Wed, 15 May 2019 18:26:00 -0400 on Seeking Alpha
Bunge Limited (BG), the agribusiness and food company, currently trades with an earnings multiple of just under 26. Although this valuation is higher than the industry average of just under 17, Bunge's sales and book multiples of 0.2 and 1.4 look undervalued compared to the averages in this industry.
Shares have been in a sustained decline since the start of 2018. Furthermore we do not see any clear divergences on the daily chart which could suggest that the selling may be coming to an end.
In saying this, many investors remain invested in this name primarily because of the generous dividend. Furthermore, a position in Bunge arguably offers more diversification in a portfolio due to the stock's exposure to the commodity markets. Presently, Bunge pays out a 3.82% dividend yield. The annual payout has been on the rise now for 17 years. Therefore with the firm having announced its first quarter numbers recently plus also having confirmed the $0.50 quarterly payout, let's take a fresh look at the dividend to see the downward trend in the share price has been affecting the key dividend metrics.
Despite having a much higher dividend yield that its competitors in this industry, dividend growth also plays a crucial factor for long-term investors. Income based investments should handily beat the inflation rate in order to ensure purchasing power is not being lost over time. Furthermore, strong dividend growth rates usually means sustained growth in the firm's bottom line.... Read more