After battling strong headwinds in 2013, chemical stocks have begun to bounce back this year driven in large part by the surging shale energy boom and a booming North American market. While any downturn in the economy could weigh on this cyclical sector, market dynamics and management strategies look poised to reward investors with performance gains and respectable dividend yields. The good news: The fortunes of chemical stocks are improving. The value of U.S. chemical sales is expected to top $1 trillion in 2018, up from $789 billion last year, according to the American Chemistry Council. The bad news: Sluggish economies in Europe and a slowdown in China have weighed on the global chemicals market.
That said, the outlook for chemical stocks is improving — worldwide chemical production will rise 3.8% this year and 4.1% in 2015. Another good sign: chemical companies are investing heavily in research and development — the ACC estimates that R&D investment will hit $68.7 billion in 2018 – up from $56.6 billion in 2012. If you’re looking to gain exposure to the sector, look for chemical stocks that have attractive valuations, solid growth prospects and dividends. Here are three chemical stocks to buy for growth and hold for the dividends: Dow Chemical (DOW), LyondellBasell Industries (LYB) and Methanex (MEOH).
Source: InvestorPlace
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