Kevin Simpson is buying this play on America's reindustrialization at a 'very attractive' price

CF Industries is one of our newest positions in our dividend income portfolio, and it fits into a theme I've been investing around for some time: the reindustrialization of America and the push to bring critical supply chains back to the U.S.

The 80-year-old company based just outside of Chicago is one of the world's largest producers of ammonia, which it converts into nitrogen products used primarily as fertilizer, and it has a large production and distribution network across North America. Key Points CF is one of the industry's lowest-cost nitrogen producers at a time when global supply is tight.

Washington wants more fertilizer made at home, and CF is a major U.S. producer. Strong free cash flow supports a growing dividend, and the stock trades at just 9 times earnings. Nitrogen is essential to modern agriculture.

Farmers need it to grow crops, and CF's products also have important industrial uses like manufacturing and emissions control. That's what makes CF interesting to me. It produces something the world can't easily go without especially with Iran and other global conflicts disrupting trade routes.

Why I'm buying A major cost advantage What really stands out about CF to me is its low-cost North American production base. Making nitrogen fertilizer requires large amounts of natural gas, and CF benefits from the region's relatively inexpensive supply.

And when there isn't enough global nitrogen supply to meet demand, I want to own one of the companies that can produce it at a lower cost than many of its competitors. America wants more fertilizer made at home There are some policy tailwinds here that we just can't ignore.

The administration is making domestic fertilizer production a priority, including a $500 million USDA program designed to increase production here in the U.S. CF YTD mountain CF Industries, YTD Now I'm not just buying CF because Washington likes it. The company's fundamentals absolutely stand on their own.

But I see that support as another tailwind for an industry that's becoming increasingly strategic to the U.S. I like what CF is doing with its cash CF also fits the way we invest in our Enhanced Dividend Income Portfolio. Dividend growth is key to our strategy, and CF has the free cash flow to support it.

Most recently, the company raised its dividend by 20%. Free cash flow in the most recent quarter jumped by more than 90%. Meanwhile, its dividend payout ratio is steadily declining, meaning it has more and more room to increase that payout further.

Why now? The shares are up more than 60% for the year, but have been treading water the last six months. During that period the valuation became more attractive as the earnings boomed and the price stayed the same. The price-earnings ratio is down to below 10, back to levels where it was to start the year.

Bottom line This is a stock that checks a lot of boxes. For us, it brings together reindustrialization, supply chain security, super strong free cash flow, and a very, very attractive valuation. Disclosures: Simpson owns in Capital Wealth Planning.

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