When the stock market gets choppy, it’s easy to overlook some of the quieter names. But every now and then, a lesser-known stock makes a big move that turns heads. That’s exactly what happened with Chemtrade Logistics Income Fund (TSX:CHE.UN) this past week. The stock jumped close to 10%, grabbing the attention of both retail and institutional investors. So, what happened, and is it too late to get in?
What happened?
Let’s start with the catalyst. On May 13, Chemtrade released its first-quarter (Q1) 2025 earnings, and the results were stronger than expected. The dividend stock reported revenue of $466.3 million, up 11.5% from the same period last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $120.1 million, a 9.2% increase year over year. Net income hit $49.1 million, well ahead of the $29.9 million analysts had expected. It also helped that the company beat revenue estimates by more than $50 million — not bad for a name that doesn’t usually make headlines.
The biggest strength in the quarter came from its Sulphur and Water Chemicals segment. Revenue there rose by 17.5% and adjusted EBITDA for the segment increased by 15.8%. That kind of growth shows that demand is solid and that Chemtrade is managing costs well. With operations across North America, it’s benefitting from stable industrial activity and continued demand for things like water treatment chemicals.
But the good news didn’t stop there. Management also boosted its guidance for the rest of the year, raising its full-year adjusted EBITDA outlook to the high end of its $430 million to $460 million range. That alone was enough to fuel optimism, but Chemtrade went one step further and introduced a long-term plan called “Vision 2030.” The strategy aims to grow adjusted EBITDA by 5% to 10% annually, reaching up to $600 million by the end of the decade. That gives investors something solid to chew on.
A safe choice
Chemtrade isn’t a high-growth tech stock, and it won’t be featured on any artificial intelligence top 10 lists. But what it does offer is essential. It provides industrial chemicals used in water treatment, agriculture, oil refining, and pulp and paper, things the economy needs to function. It’s the kind of dividend stock that tends to do well regardless of the economic cycle, which makes it appealing in times of volatility.
Another part of the story is income. Chemtrade increased its monthly distribution to $0.0575 per unit this quarter, or about $0.69 annually. That gives it a current yield of roughly 6.45%, which is especially attractive in today’s market. Even more impressive is that the payout ratio for Q1 2025 was just 32%, meaning there’s still plenty of room to reinvest in the business. Income investors take note: this is a rare combination of a high yield and room to grow.
Chemtrade is also returning cash to shareholders in another way, through buybacks. In the first quarter alone, the dividend stock repurchased 3.9 million units under its normal course issuer bid. That’s a clear sign that management believes the stock is undervalued. It plans to renew the buyback program later this year, pending regulatory approval.
Bottom line
Analysts have responded positively, with several maintaining or raising their price targets. With a diverse product portfolio, strong financials, and a focus on shareholder returns, Chemtrade is increasingly being seen as more than just a stable income play; it’s also a quiet growth story.
For investors looking for an alternative to high-volatility names, Chemtrade may be worth a closer look. It won’t double overnight, but with rising earnings, a strong yield, and a credible plan to grow, it checks a lot of boxes. Sometimes boring is beautiful, especially when it quietly climbs 10% in a week.
