As the company’s name implies, Sociedad Quimica y Minera de Chile (NYSE:SQM) has operations in Chile – yet, there’s more to this company than meets the eye. You can hold SQM stock for direct exposure to the high-conviction lithium market, or for reliable dividends. Plus, you can check SQM’s financials and reaffirm your conviction in this well-established mining company.
Incorporated in 1968, Sociedad Quimica y Minera de Chile (which we can abbreviate as “SQM”) actually isn’t only a lithium producer. The company also has interests in potassium, iodine, boric acid and magnesium chlorides.
Let’s not kid ourselves, though. With the electric vehicle (EV) market growing year after year, the world needs lithium for batteries and that’s why many investors are interested in SQM. That’s perfectly fine, as SQM is among the most ambitious lithium producers, so let’s learn more about this intriguing international business.
|SQM||Sociedad Quimica y Minera de Chile||$92.62|
Get Dividends and Value with SQM Stock
First things first: SQM is a generous dividend payer. You must admit, a forward annual dividend yield of 7.42% is awfully hard to resist.
Value seekers should be interested as well. That’s because SQM has a trailing 12-month price-to-earnings (P/E) ratio of 12.38. So, there’s a real bargain here if you buy shares at the current price.
Plus, you’ll get to participate in a fast-growing industry with SQM stock. SQM CEO Ricardo Ramos estimates that lithium’s “demand growth will be over 40% when compared to last year.” That’s why the company continues to invest in new lithium projects.
As Ramos stated, SQM purchased a new plant in China that can produce up to 30,000 metric tons of lithium hydroxide. In addition, SQM is expanding its lithium hydroxide capacity in Chile from 40,000 metric tons to 100,000 metric tons.
SQM Is a Revenue-Growth Juggernaut
Granted, some mining firms will succeed while others won’t. There’s risk involved in the mining business, but the risk can be mitigated when a company has firm financials.
Thus, investors can feel more confident after they glance at SQM’s third-quarter 2022 financial report. The company’s growth has been so impressive, you might not even believe it at first:
- $2.9583 billion in quarterly revenue, up approximately 347% year-over-year (YOY) [Note to editors: This percentage increase is stated in the press release]
- $1.6327 billion in gross profit, up 626% YOY [Note to editors: ($1.6327 billion – $224.8 million) / $224.8 million) = 626.29%]
- $1.0999 billion in net income, up 937% [Note to editors: ($1.0999 billion – $106.1 million) / $106.1 million) = 936.66%]
With figures of that magnitude, SQM should have no problem continuing to distribute its dividends. Besides, Ramos reported that “during the past few months, we have signed long-term contracts for both lithium and iodine,” leaving little doubt that SQM will have substantial revenue streams coming in.
What You Can Do Now
If you don’t already have exposure to the international lithium industry, now’s a great time to get started. Even if you’re already invested, you can build a position in SQM stock in order to qualify for dividend payments in the future.
Sure, there are other lithium miners out there. However, for great yield, undeniable growth, and mega-scale production capacity, you’d be hard-pressed to find a better lithium producer than SQM.
On the date of publication, Louis Navellier had a long position in SQM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.