AlzChem Group AG (ETR:ACT): A Dividend Gem With Firepower For Growth
90min read Investors, take note: AlzChem Group AG (ETR:ACT) is primed to deliver a solid dividend payment this month—and its financial performance suggests this European chemical powerhouse is just getting started. Let’s dig into the numbers and see why this stock could be a buy now.
First, the dividend: On May 13, 2025, eligible shareholders will receive €1.80 per share, a meaningful increase from prior years. To qualify, you need to own the stock by the ex-dividend date of May 9. The dividend yield of 1.5% may not blow you away at first glance, but here’s the kicker: Analysts project this yield could jump to 2.2% by 2026 as the company’s cash flow grows. And with a payout ratio of just 32% of earnings, this dividend is well-covered—no gimmicks here.
Ask Aime: "AlzChem's dividend hike is on the horizon, could it be a good buy?"
But dividends alone don’t make a great investment. Let’s look at what’s driving AlzChem’s financial engine.
Q1 2025: Resilience Amid Headwinds
Despite a 4% sales decline to €144.68 million in Q1 2025, the company delivered 20% higher net income (€14.59 million) and a 10% EBITDA rise to €27.4 million. How? By leaning into its high-margin Specialty Chemicals segment, which grew 2% to €94.5 million. Products like Creapure® (a premium creatine for human nutrition) and custom manufacturing services are fueling this segment’s success.
Ask Aime: "Is AlzChem's stock a buy now with a projected 2.2% yield in 2026?"
Meanwhile, the Basics & Intermediates segment stumbled, dropping 14% to €42.6 million due to weak European steel demand. But here’s the silver lining: Perlka® fertilizer sales in agriculture held steady, and management isn’t panicking.
Cash Flow: The Real Story
The operating cash flow surged to €49.5 million in Q1, driven by strong collections tied to its nitroguanidine expansion project—a critical defense industry product. Free cash flow hit €36.4 million, even as capital expenditures nearly doubled to €13.1 million. With €91.4 million in cash reserves, AlzChem is in a position to invest aggressively while still rewarding shareholders.
Why This Dividend Is Safe—and Growing
The numbers don’t lie:
- The dividend payout ratio is well within a safe range (32% of earnings).
- EBITDA margins expanded to 18.9%, up from 16.6% in 2024, signaling operational efficiency.
- Management has reaffirmed 2025 guidance: 5% sales growth, 7% EBITDA growth, and a 19.5% EBITDA margin target.
The Growth Engine: Specialty Chemicals and Strategic Moves
AlzChem isn’t just sitting on its cash. It’s doubling down on high-margin products:
1. Nitroguanidine Expansion: Construction is underway to meet rising defense industry demand, which should boost volume and margins.
2. U.S. Market Opportunity: High U.S. tariffs on Chinese imports are creating a gap for “Made in Germany” chemicals, especially in sectors like animal nutrition. AlzChem’s Creavitalis® (animal feed additive) is poised to capture this share.
Risks to Watch
- The Basics & Intermediates segment remains vulnerable to European steel industry weakness.
- Global trade tensions or a sudden drop in defense spending could impact nitroguanidine demand.
Conclusion: A Dividend Play With Growth Legs
AlzChem Group AG is a rare breed: a company that’s paying a solid dividend while investing in high-margin growth opportunities. The May 13 dividend isn’t just a payout—it’s a signal of confidence. Backed by €91.4 million in cash, a 18.9% EBITDA margin, and a 20% net income jump, this stock has the fuel to outperform in a challenging market.
If you’re looking for a dividend-paying stock with growth potential, AlzChem (ETR:ACT) is worth a serious look. The dividend is safe, the cash flow is strong, and the specialty chemicals story is just getting started.
Action Alert: With the ex-dividend date on May 9, now’s the time to act. This isn’t just about a check in the mail—it’s about owning a company building a brighter future.
