Why Nutrien Stock Jumped 55% in 2021

Nutrien (TSX:NTR)(NYSE:NTR) had a stellar year for 2021, and while 2022 may slow, expect great things from this stock for long-term investors.

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Nutrien (TSX:NTR)(NYSE:NTR) managed to be one of the few Canadian stocks to soar during 2021. While others climbed and fell, Nutrien remained on a steady streak upwards. It now trades at all-time highs, currently at $95 per share. That’s a 55% increase in 2021 alone.

But what about 2022? Are the reasons the company soared last year likely to continue this year as well? Let’s take a look.

An essential service

No matter what happens in the world, people need to eat. And when the world is being affected by a pandemic, floods, mudslides, and other disasters, that need also doesn’t go away. That’s why crop nutrient provider Nutrien has remained a strong player, even during this last year.

The company is now the world’s largest producer of potash, which farmers use to boost their crop yields. Nutrien was already a strong company for Motley Fool investors to consider even before the pandemic. This came from major partnerships with highly populated countries like India and China needing crop nutrients and seeking out Nutrien.

This is the case everywhere. The company could have seen competitors edge in on profits during the pandemic, but instead, it entered the digital age and saw its e-commerce arm explode. This will help it remain a strong producer, with stockpiles that will continue driving potash demand well into 2022.

Long-term defence

If you’re a long-term Motley Fool investor, Nutrien proved in the last year why you want it in your corner. The company managed to hit record earnings in the third quarter and the first nine months of the year during it latest report. Further, it raised its full-year guidance for 2021. It now expects between US$6.9 and US$7.1 billion, up from between US$6.0 and US$6.4 billion. Meanwhile, net earnings jumped by over a dollar to between US$5.85 and US$6.10.

And don’t think this will suddenly disappear. Even if you ignore the increasing demand for Nutrien as a whole, the company also has a strong balance sheet. This has allowed it to become an acquisition powerhouse. The company has seen major organic and acquisition growth over the last few years, cornering the market through these means. And that is likely to continue for the foreseeable future.

All this growth is likely to mean one thing: a dividend increase. Nutrien already offers a 2.47% dividend yield. However, given its strong performance during the pandemic and likely strength in 2022, Motley Fool investors could see a big jump in 2022. This could be coupled by a share-buyback program, as the company already repurchased 2.4 million shares last quarter.

Foolish takeaway

Commodity prices continue to climb as inflation rises. Farmers now enjoy above-average profits from the increase in value of their crops. This makes Nutrien’s crop nutrients a necessity for consumers and farmers alike, to keep cash coming in for everyone.

And I do mean everyone. That includes Motley Fool investors seeking out a defensive stock that will bring in returns and dividends for decades. Nutrien is that stock. Enjoy a 2.47% dividend yield, 55% in returns, and (somehow) a valuable share price trading at 18.95 times earnings.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien Ltd.

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