Current Dividend Yield: 3.9%
Performance So Far in 2012: -4%
E.I. du Pont de Nemours & Co. (NYSE:DD) — or just DuPont, since there’s no call for formality here — is desperately waiting for a cyclical recovery.
The chemicals giant has an array of widely used products, such as Tyvek house wrap, Lycra synthetic fabrics, Teflon protective coatings, Pioneer seeds and other agricultural options. That diversity of business generally can help DD weather larger market turmoil, while still benefiting from the upward pull of a more positive environment. Though it did give up a bit of that versatility a few months ago when it sold its performance-coatings division to Carlyle Group (NASDAQ:CG).
But because many of its products are tied to business spending, investors might be wary of a turnaround without some sort of cyclical boom.
That came to light last quarter, when DuPont reported disastrous earnings for the third quarter. Profits plunged 98% year-over-year thanks to restructuring and impairment charges, but even adjusted earnings were pinched on lower demand for photovoltaic materials used in solar panels and titanium dioxide, a paint pigment. DuPont also slashed its full-year forecast and announced it would be cutting 1,500 positions worldwide. That report helped knock DD shares into the red for 2012, and it has yet to claw back into black.
DuPont still has strong cash holdings, so you can still believe in its nearly 4% dividend. Plus, DD is using some of the proceeds from its coatings sale to help finance a $1 billion repurchase plan starting in 2013 — though depending on your stance on buybacks, that might not be hopeful news.