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Additional Reading from MarketBeat Media Washington's $1.6B Endorsement Turns USA Rare Earth Into a ForceSubmitted by Jeffrey Neal Johnson. First Published: 1/27/2026. 
Key Takeaways - The Department of Commerce has validated USA Rare Earth as a strategic partner by taking a direct ownership stake to accelerate domestic production capabilities.
- This capital injection fully funds the company's strategy to build a complete mine-to-magnet supply chain for heavy rare earths in the United States.
- MP Materials remains the operational backbone of the North American sector, with established production and its own government backing for light rare-earth elements.
The United States government has shifted from passive observer to active participant in the race for critical minerals. In the final week of January, the Department of Commerce announced a $1.6 billion financing package for USA Rare Earth Inc. (NASDAQ: USAR). In a historic move for industrial-sector policy, the deal includes the government taking a direct equity stake in the company. The announcement created an immediate divide in the rare-earth sector. Shares of the newly validated challenger, USA Rare Earth, jumped more than 20% intraday before settling at $26.72 — a 7.87% gain by the close. Conversely, MP Materials Corp. (NYSE: MP), the only scaled producer of rare earths in North America, slid 8.95% to $63.35 as investors rotated capital toward the government-backed newcomer. The former CEO of Google calls it the most important thing to happen in 500, maybe 1,000 years of human society. A former U.S. Treasury Secretary says when your great-grandchildren write the history of this period, the political headlines will be the second or third story. The first story is something none of us have seen before. The dot-com collapse, global financial crisis, and COVID-19 pandemic don't compare to what's coming next. We may be entering a period of dramatic, almost unimaginable change. See the full warning and how to prepare now. This investment does more than fund a mine; it builds a government-backed moat around a domestic supply chain. The package de-risks the capital-intensive development of critical minerals and positions USAR as a major geopolitical play alongside the established leader, MP Materials. $3.1 Billion: Bridging the Valley of Death Mining is a notoriously difficult business for public companies. Developers often face a "valley of death" — the period between discovering minerals and generating sales — during which they burn through cash building infrastructure without revenue. Monday's announcement effectively bridges that gap for USA Rare Earth, removing the bankruptcy risk that frequently plagues junior miners. The government's $1.6 billion package is structurally notable. It comprises a $1.3 billion senior secured loan and $277 million in federal grants. Crucially, the agreement includes a provision for the U.S. government to acquire roughly 16.1 million shares and 17.6 million warrants, giving taxpayers an estimated 10% ownership stake. Investors received a second vote of confidence alongside the government news. USAR also secured $1.5 billion in private capital through a Private Investment in Public Equity (PIPE), anchored by Inflection Point, bringing the total liquidity injection to more than $3.1 billion. This funding fully finances the company's mine-to-magnet strategy and accelerates two primary assets: - The Round Top Project (Texas): Commercial production has been accelerated to late 2028.
- The Stillwater Magnet Plant (Oklahoma): Commissioning of Line 1a is underway in Q1 2026, with an initial capacity target of 1,200 metric tons per year.
While MP Materials dominates the market for light rare earths (NdPr) used in electric vehicles and wind turbines, the government chose USAR for a different strategic reason: heavy rare earths. USAR's Round Top deposit contains dysprosium and terbium. These heavy elements are essential for high-temperature applications. Standard magnets lose their magnetism at high heat; magnets doped with dysprosium do not. That makes them critical for military hardware such as F-35 fighter jets and missile guidance systems. With China currently controlling nearly 100% of the heavy rare earth supply, the government's equity stake signals that USAR is the chosen entity to help close this national-security vulnerability. The Incumbent's Dilemma: Is MP Materials Now a Buy? While USAR celebrated, MP Materials experienced heavy selling pressure. Despite being the established leader with operational mines and a market capitalization of roughly $11.2 billion, MP stock fell nearly 9%. Analysts largely attribute the decline to sector rotation rather than a fundamental problem at MP. For several years MP Materials has been the primary public equity vehicle for investors seeking exposure to the North American rare-earth supply chain. With the government's sizeable validation of USA Rare Earth, investors rotated from the safe, established play (MP) into the higher-growth, government-backed opportunity (USAR). That said, MP Materials remains the operational backbone of the sector. In its Q3 2025 earnings, the company reported revenue of $53.55 million, beating analyst expectations. MP also has its own government backing, having previously secured a $400 million investment from the Department of Defense and a price-floor guarantee for its products. That price floor helps protect MP's margins against market volatility — a form of support USAR does not yet have in operation. Investors should note one cautionary signal: regulatory filings show that CEO James Litinsky and CFO Ryan Corbett sold shares in late 2025 and January 2026. Insider selling often occurs for tax or personal-liquidity reasons, but sales during a period of heightened government support can be read by markets as a lack of conviction in near-term price appreciation. Despite that activity, MP Materials may present a value opportunity. Trading around $63, the stock sits well below its average analyst price target of $78.91. For investors, this pullback could be a discounted entry into a company that is already producing metal and generating revenue — unlike pre-revenue USAR. MP's Independence Facility is producing metal today, and its magnet-production ramp is expected to continue through 2026. While USAR sells the 2028 vision, MP is delivering results in 2026. A Duopoly of National Champions The United States is shaping a bifurcated rare-earth market. On one side is MP Materials, the industrial champion supplying the light rare earths needed for the high-volume electric-vehicle economy. On the other is USA Rare Earth, the strategic champion focused on heavy rare earths critical for national defense. The Department of Commerce's $1.6 billion investment validates the sector and signals that failure of the domestic supply chain is not an option. By taking an equity stake, the government has effectively backed the moat protecting these companies with taxpayer support. Investors will watch upcoming data points for confirmation. USA Rare Earth is expected to report Q4 earnings on February 5, 2026, when the market will look for updates on the Stillwater plant's commissioning. MP Materials follows with its report on February 19, 2026, where investors will seek evidence that the company has returned to profitability as forecast. For the first time, investors have two distinct, government-backed routes to participate in the critical-mineral supercycle.
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