Why It Still Makes Sense to Hold Air Products
Air Products and Chemicals, Inc. (NYSE: APD) continues to lean into what it does best: investing in large, high-return industrial gas projects, tightening operations, and partnering where it adds scale. That focus, paired with disciplined execution, positions the company for growth even as parts of the global economy slow.
Over the last 12 months, APD shares fell 9.6%. That’s a touch better than the 10.6% decline across its industry. The gap isn’t huge, but it’s notable—and it invites a closer look at whether holding APD still fits your plan.
Strategy, Projects, and Where Growth Could Come From
Management’s playbook hasn’t changed: deploy capital into high-return industrial gas opportunities and keep sharpening efficiency. The company’s gasification strategy, in particular, has moved from concept to contribution, with more projects moving through construction and into operation—projects that are intended to lift both earnings and cash flow as they ramp.
Take the Jazan project in Saudi Arabia. The second phase is now complete, which expands operating scale and opens the door to additional investment options tied to that platform. Looking ahead “over the next several years,” Air Products plans to commit about $30.8 billion to similarly high-return opportunities—an investment slate aimed squarely at growing value for shareholders if executed as planned.
On the blocking-and-tackling side, productivity remains a priority. The company has been working through cost actions to better manage expenses, and early results are encouraging. That should support margins. With inflation still in the mix, Air Products is also pushing through pricing improvements where appropriate, which can help protect profitability.
Income investors get something, too. In early January, the board raised the quarterly dividend to $1.77 per share, marking the 42nd straight year of increases. In 2023, the company returned roughly $1.5 billion in dividends, and it expects to pay about $1.6 billion in 2024. The message is clear: the dividend is a core part of the story.
Where the Outlook Is Tougher: China and Europe
Even with solid execution, the macro backdrop matters. Demand in China has been weaker, and that’s weighed on the Industrial Gases - Asia business. A slower recovery in China, coupled with ongoing softness in electronics, could continue to cap growth there for a while.
Europe brings its own challenges. Air Products has seen softer demand for merchant products, and while volumes held flat year over year in the fiscal third quarter, that stability largely came from new assets in Uzbekistan offsetting lower volumes elsewhere. With industrial output in the region sluggish, the path forward in Europe looks more complicated.
Market Context: Reading APD’s Recent Trading
Stock performance ultimately tracks earnings power, and APD’s project pipeline supports that path. Still, markets in China and Europe remain volatile, which adds uncertainty around timing. For investors, it’s a balance: patience for long-lived projects versus near-term macro noise.
Exploring Other Basic Materials Stocks
If you’re comparing options within Basic Materials, a few names currently carry stronger rankings. Hawkins, Inc. (NASDAQ: HWKN), Element Solutions Inc (NYSE: ESI), and Eldorado Gold Corporation (NYSE: EGO) are all rated Zacks Rank #1 (Strong Buy), reflecting favorable setups right now.
Hawkins, for example, is projecting earnings of $4.14 for the current fiscal year, a 15.3% year-over-year increase. Element Solutions has delivered an average earnings surprise of 3.8% in recent quarters, underscoring consistent execution. And Eldorado Gold stands out with projected earnings growth of 136.8% for the current fiscal year, while also consistently topping earnings estimates.
Bottom Line: Should You Keep Holding APD?
APD’s long-cycle investments, productivity work, and steady dividend point to a company building for the long term. Headwinds in China and Europe won’t disappear overnight, and quarterly results may reflect that. But for investors who value a visible project pipeline and reliable income, maintaining a position can still make sense. One note, one reader: match the holding to your time horizon and risk tolerance, then let the strategy do its work.
Frequently Asked Questions
What’s the core case for holding Air Products right now?
APD is executing on large, high-return projects, improving productivity, and maintaining disciplined pricing. Pair that with a long history of dividend growth, and you have a hold case built on cash flow visibility and income, even as near-term markets wobble.
How did APD perform versus its industry over the past year?
The stock declined 9.6% over the last year, slightly better than the industry’s 10.6% drop. It’s not outperformance to celebrate, but it does suggest relative resilience in a weak tape.
What are the biggest risks to APD’s growth outlook?
Slower demand in China and persistent softness in Europe—particularly for merchant products—are key risks. A prolonged recovery in China and weak electronics demand could continue to pressure volumes.
How meaningful is the dividend in APD’s investment story?
Very. The board raised the quarterly dividend to $1.77 per share in early January, marking 42 consecutive years of increases. APD paid about $1.5 billion in dividends in 2023 and plans roughly $1.6 billion in 2024, signaling a firm commitment to income returns.
Which other Basic Materials stocks look attractive right now?
Hawkins (projected earnings of $4.14 for the current fiscal year, up 15.3% year over year), Element Solutions (average earnings surprise of 3.8% in recent quarters), and Eldorado Gold (projected earnings growth of 136.8% and a track record of beating estimates) all carry Zacks Rank #1 (Strong Buy).
