Income Investors Rejoice, 6% Yield And Capital Appreciation: Dow

Seeking AlphaDividend Ideas | Basic MaterialsIncome Investors Rejoice, 6% Yield And Capital Appreciation: DowAug. 16, 2020 12:16 PM ET|| About: Dow Inc. (DOW), Includes: CTVA, DDby: Paul FrankePaul Franke Contrarian, long/short equity, momentum, Deep ValueSummaryDow should benefit from a cyclical upturn in the global economy and a lower U.S. Dollar value next year.
High free cash flow generation and dividend payouts are worth serious consideration by investors.
Technical momentum evidence on the buy side has been growing of late.
Dow Inc. (DOW) was recently spun-off from DuPont (DD) in 2019. The combined industrial/chemical product companies merged in 2017 before the official breakup, including a third wheel split, the Corteva (CTVA) agribusiness. Dow and DuPont each held complementary/competing businesses that first merged together areas of similar focus, then broke apart based on those differences. The question remains: will the divorced group perform better dating on their own and searching for deeper meaning and profits while single?
My quick answer is yes. All three of the former DuPont family will have stronger futures as individually-focused enterprises. Each can now determine a growth path, which catalysts to invest in heavily, and what cost structure best fits shareholder returns long term. Dow manufactures a wide range of chemicals worldwide from ethylene and propylene to polyethylene, ethylene oxides, propylene oxide, propylene glycol and polyether polyols. Aromatic isocyanates and polyurethane systems, coatings, adhesives, sealants, elastomers, and composites are part of the equation. It also provides caustic soda, ethylene dichloride and vinyl chloride monomers, plus cellulose ethers, latex powders and acrylic emulsions. Architectural and industrial paints/coatings, plus industrial coatings for wood, metal packaging, traffic markings, thermal paper, and leather are part of the portfolio. Performance monomers and silicones round out just some of its... Read more