Category Monthly Dividend

Updated on March 7th, 2025 by Nathan Parsh

Insurance can be a great business. Insurers collect revenue from policy premiums and make money by investing the accumulated premiums not paid out in claims, known as the float.

Even legendary investor Warren Buffet sees the value of insurance stocks –his investment conglomerate Berkshire Hathaway (BRK.A) (BRK.B) owns GEICO, General Re, and more.

High profitability allows many insurance companies to pay dividends to shareholders and raise their dividends over time. For example, Aflac (AFL) has increased its dividend for 43 years in a row.

This means the company qualifies as a Dividend Aristocrat – a group of 69 companies in the S&P 500 Index with 25+ consecutive years of dividend increases.

You can download a free list of all 69 Dividend Aristocrats, along with important metrics like dividend yields and price-to-earnings ratios, by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

This article will take an inside look at Aflac’s business model and what drives its impressive dividend growth.

Business Overview

Aflac was formed in 1955 by three brothers: John, Paul, and Bill Amos. Together, they came up with the idea to sell insurance products that paid cash if a policyholder got sick or injured. In the mid-twentieth century, workplace injuries were common, and no insurance product covered this risk.

Today, Aflac offers a wide range of products, including accident, short-term disability, critical illness, hospital indemnity, dental, vision, and life insurance.

The company specializes in supplemental insurance, which pays out to policyholders if they are sick or injured and cannot work. Aflac operates in the U.S. and Japan, with Japan accounting for approximately ~55% of the company’s net earned premiums. Because of this, investors are exposed to currency risk.

Aflac’s earnings will fluctuate based on exchange rates between the Japanese yen and the U.S. dollar. When the yen rises against the dollar, it helps Aflac because each yen earned becomes more valuable when reported in U.S. dollars.

Aflac’s strategy is to increase premium growth through new customers and increase sales to existing customers. It is also investing in expanding its distribution channels, including its digital footprint, in the U.S. and Japan.

Aflac continues to perform well overall. On February 5th, 2025, Aflac released fourth-quarter and full-year financial results.

Source: Investor Presentation

For the quarter, the company reported $5.4 billion in revenue, which was a 42.1% increase compared to Q4 of 2023. Net earnings equaled $1.9 billion, or $3.42 per share, compared to $268 billion, or $46 per share, in the prior year.

However, this included $1 billion in investment gains, which are excluded from adjusted earnings. On an adjusted basis, earnings-per-share equaled $1.56 versus $1.25 in the prior year. Revenue was $1.24 billion more than expected, while adjusted earnings-per-share was $0.06 below estimates.

For 2024, revenue improved 1.2% to $18.9 billion, and adjusted earnings-per-share were $7.21 compared to $6.23 in the prior year.

Aflac has also aggressive reduced its share count, repurchasing seven million shares at an average price of ~$107 in Q4 2024. The company has 47.3 million shares, or 8.6% of its outstanding share count, remaining on its repurchase authorization.

Growth Prospects

From 2007 through 2020, Aflac grew earnings-per-share by an average compound rate of 8.8% per year, although part of that improvement is related to tax reform. Also, remember that the Yen was generally weakening against the dollar for a good portion of the last decade.

Over the last 10 years, the company’s earnings-per-share had a CAGR of 9.9%, though that growth rate has slowed to 6.9% over the previous five years.

In Japan, Aflac wants to defend its strong core position while expanding and evolving to customer needs. To this point, Aflac Japan is expanding its “third-sector” product offerings. These include non-traditional products such as cancer insurance and medical and income support.

Aflac has enjoyed strong demand in Japan for third-sector products due to the country’s aging population and declining birth rate.

Aflac has two sources of revenue: income from premiums and income from investments. The premium side is generally sticky, with policy renewals making up the bulk of income. However, Aflac operates in two developed markets where we would not anticipate seeing outsized growth in the business.

The other lever available is on the investment side, where most of the portfolio is in bonds. In addition, the share repurchase program has been an important factor, and we believe it will continue to drive earnings per share.

We are forecasting 7% annual growth rate over the next five years.

Competitive Advantages & Recession Performance

Aflac has many competitive advantages. First, it dominates its niche. It operates in supplemental insurance products and is the leading company in that category. Its business model requires low capital expenditures and sells a product that enjoys steady demand.

Aflac’s strong brand is a key competitive advantage. Competition is intense in the insurance industry, considering the commodity-like nature of the products. To retain customers and attract new customers, Aflac invests heavily in advertising.

Aflac is also a recession-resistant company. It remained profitable even during the Great Recession:

• 2007 earnings-per-share of $1.64
• 2008 earnings-per-share of $1.31 (-20% decline)
• 2009 earnings-per-share of $1.96 (49.6% increase)
• 2010 earnings-per-share of $2.57 (31.1% increase)

Notably, Aflac had a tough year in 2008, which is understandable given the deep recession at the time. However, its earnings-per-share came roaring back in 2009 and 2010. More recently, the company continued to grow even during the worst COVID-19 pandemic. Aflac’s earnings-per-share have increased or remained stable over the last 10 years.

Valuation & Expected Returns

Over the last decade, shares of Aflac have traded hands with an average P/E ratio of roughly 11x times earnings.

We believe this is more or less fair value for the security, considering that many insurers trade at a comparable multiple. This lower average valuation multiple makes the robust share repurchase program more effective.

Ongoing owners are much better served if the company buys out past partners at 11x times earnings as opposed to, say, 15x—or 20x times earnings.

Based on 2025’s expected earnings-per-share of $6.93, shares are presently trading hands at 15.6 times earnings. As such, this implies an annual valuation headwind of 6.7% should shares revert to 11 times earnings over the next five years.

In addition, the 6% growth rate and 2.1% starting dividend yield should aid shareholder returns. When all three components are combined, this implies the potential for 2.6% annualized returns.

Aflac’s dividend appears very safe, with an expected dividend payout ratio of 33% for 2025. The dividend has room for future increases even if EPS growth slows. The dividend has a CAGR of 10.9 since 2015, but this growth rate accelerates to 15.7% over the last five years.

Final Thoughts

Aflac is a high-quality company with a profitable business and a strong brand.

The company has increased its dividend for 43 years in a row. Thanks to a low payout ratio and future earnings growth, it should continue to do so.

Aflac is not a high-dividend stock, with a current yield of 2.1%. However, it offers steady dividend increases and a highly sustainable payout.

However, shares are currently trading higher than the company’s historical valuation. This results in low single-digit total returns expected over the next five years, so the security earns a sell rating.

If you are interested in finding high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 6th, 2025 by Nathan Parsh

At Sure Dividend, we are huge proponents of investing in high-quality dividend growth stocks. We believe companies with long history of raising their dividends will most likely reward their shareholders with superior long-term returns.

This is why we focus so intently on the Dividend Aristocrats.

Our review of each of the 69 Dividend Aristocrats, a group of companies in the S&P 500 Index with 25+ consecutive years of dividend increases, continues with medical supply company Becton Dickinson (BDX).

You can download an Excel spreadsheet with the full list of all 69 Dividend Aristocrats (plus important metrics like dividend yields and price-to-earnings ratios) by using the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

Becton Dickinson has grown into a global giant. In 2017, it completed its $24 billion acquisition of C.R. Bard, its largest acquisition ever, bringing together two huge companies in the medical supply industry. Much more recently, in September 2024, it completed its $4.2 billion purchase of Edward Lifesciences’ (EW) Critical Care segment.

The industry’s fundamentals remain very healthy. Aging global populations, growing healthcare spending, and expansion in emerging markets are attractive growth catalysts. In this article, we examine Becton Dickinson’s investment prospects.

Business Overview

Both Becton Dickinson and C.R. Bard have long operating histories. C.R. Bard was founded in 1907 by Charles Russell Bard, an American importer of French silks, after he began importing Gomenol to New York City. At the time, Gomenol was commonly used in Europe, and Mr. Bard used it to treat his discomfort from tuberculosis.

By 1923, C.R. Bard was incorporated. Later, it developed the first balloon catheter, and slowly expanded its product portfolio.

Meanwhile, Becton Dickinson has been in business for more than 120 years. Today, the company employs more than 75,000 employees in over 50 countries. It generates approximately $20 billion in annual revenue, and slightly more than 40% of annual sales come from outside the U.S.

With the addition of C.R. Bard, Becton Dickinson now has three segments: Medical, Life Sciences, and Intervention, which houses products manufactured by Bard. The company sells products in several categories within these businesses. Some of its core product categories include diagnostics, infection prevention, surgical equipment, and diabetes management.

On February 5th, 2025, BD released earnings results for the second quarter of fiscal year 2025, which ended on December 31st, 2024.

Source: Investor Presentation

For the quarter, revenue grew 9.8% to $5.17 billion, which beat estimates by $60 million. On a currency neutral basis, revenue grew 9.6%. Adjusted earnings-per-share of $3.43 compared favorably to $2.68 in the prior year and was $44above expectations.

Organic growth was 3.9% for the period. For the quarter, U.S. grew 12% while international was up 6.7% (up 6.3% on a reported basis). COVID-19 diagnostic revenue was not material during the period.

The Medical segment grew 1.7% to $2.62 billion due to improvements in Mediation Management Solutions and Medication Delivery Solutions. Life Science revenue was up 0.5% to $1.30 billion as gains in Diagnostics Solutions and Specimen Management were partially offset by weaker results in Biosciences. Interventional increased 5.5% to $1.26 billion due to growth in all businesses.

BD provided an updated outlook for fiscal year 2025 as well. The company expects revenue in a range of $21.7 billion to $21.9 billion for the fiscal year, down from $21.9 billion to $22.1 billion previously.  Adjusted earnings-per-share is projected to be in a range of $14.30 to $14.60, compared to $14.25 to $14.60 previously.

Growth Prospects

Becton Dickinson has several avenues for future growth. For starters, the company is a leader in many of the areas that it competes.

Source: Investor Presentation

The company’s products and services are trusted by customers, making them a key component throughout the sector.

Second, aging demographics should provide tailwinds to the sector in general and the company in particular. Last year, the percentage of the global population that was at least 65 years old reached 10%, this is double what it was in the 1970s. This age group is projected to reach 1.6 billion, or 16% of the world’s population, by 2050. As people age, their need for healthcare services increases.

Becton Dickinson has been fairly active in acquisitions, with Bard being one of it largest purchases ever. The company benefits from a size and scale that makes it likely that it will continue to be able to add to its core businesses through bolt on acquisitions.

Becton Dickinson is also about to undergo a transformation to its business model. The company announced at the time of its mostly recent quarterly report that it is going to separate its Biosciences and Diagnostic Solutions businesses by the end of fiscal year 2026 as it looks to become a more pureplay medical device company. This could earn the stock a higher multiple from the market as these are much higher margin businesses and the ones likely to see sustained growth in the future.

BDX has increased earnings-per-share by approximately 7% per year over the past 10 years, and has grown earnings in 8 out of the last 10 years. We feel the company can grow earnings-per-share at a rate of 8% per year through fiscal 2030.

Competitive Advantages & Recession Performance

Becton Dickinson has significant competitive advantages, including scale and a vast patent portfolio, due to its high investment spending.

Becton Dickinson spends over $1 billion per year on research and development. This spending has certainly paid off, with strong revenue and earnings growth over the past several years. The company has obtained leadership positions in their respective categories because of product innovation, a direct result of R&D investments.

These competitive advantages provide the company with consistent growth, even during economic downturns. Becton Dickinson steadily grew earnings during the Great Recession. Becton Dickinson’s earnings-per-share during the recession are as follows:

• 2007 earnings-per-share of $3.84
• 2008 earnings-per-share of $4.46 (16% increase)
• 2009 earnings-per-share of $4.95 (11% increase)
• 2010 earnings-per-share of $4.94 (0.2% decline)

Becton Dickinson generated double-digit earnings growth in 2008 and 2009, during the worst years of the recession. It took a small step back in 2010, but continued to grow in the years since, along with the economic recovery.

The ability to consistently grow earnings each year of the Great Recession, which was arguably the worst economic downturn in decades, is extremely impressive.

Becton Dickinson also performed well during the worst of the COVID-19 pandemic as the company benefited from the increased demand for healthcare equipment.

The reason for its strong financial performance, is that health care patients need medical supplies. Patients cannot choose to forego necessary healthcare supplies. This keeps demand steady from year to year, regardless of the condition of the economy.

Becton Dickinson has a unique ability to withstand recessions, which explains its 52-year history of consecutive dividend increases. Becton Dickinson’s dividend is also very safe based on its fundamentals.

Valuation & Expected Returns

Using the midpoint for estimated earnings-per-share of $14.45 for the fiscal year 2025, the stock has a price-to-earnings ratio of 15.5x. Our fair value estimate for BDX stock is a P/E ratio of 19x, meaning shares appear undervalued. Multiple expansion to the fair value P/E could increase annual returns by 4.2% per year over the next five years.

But valuation isn’t the only factor in estimating total returns. BDX will also generate returns from earnings growth and dividends.

As far as dividends go, Becton Dickinson remains a quality dividend growth stock. It has a very secure payout and room for growth. Based on fiscal 2025 earnings guidance, Becton Dickinson will likely have a dividend payout of 29%.

This is a very low payout ratio. It leaves plenty of room for sustained dividend growth moving forward, particularly since earnings will continue to grow.

We project annual returns of 13.8% through fiscal year 2030, stemming from 8% earnings growth, the current dividend yield of 1.9%, and the 4.2% yearly boost from P/E expansion. The expected annual return earns the stock a buy recommendation.

Final Thoughts

Becton Dickinson’s business continues to perform very well. Given the positive growth outlook for the healthcare industry, we feel that Becton Dickinson has room for strong earnings growth.

In addition, Becton Dickinson is highly likely to increase its annual dividend for many years. Becton Dickinson is an attractive stock for dividend growth investors with expected total returns of nearly 14% per year and a safe and growing dividend.

Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:

If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:

Updated on March 6th, 2025 by Nathan Parsh

PPG Industries (PPG) is one of the largest paint companies in the world. It is also one of the most reliable dividend stocks in the market—PPG has paid dividends every quarter since 1899.

Moreover, the company has increased its dividend each year for the last 53 years, which qualifies it for the exclusive Dividend Aristocrats list.

This is a group of 69 stocks in the S&P 500 Index that have had at least 25 consecutive years of dividend growth.

We consider the Dividend Aristocrats to be among the elite dividend-paying companies. With this in mind, we created a full list of all 69 Dividend Aristocrats.

You can download the entire Dividend Aristocrats list, with important financial metrics like dividend yields and P/E ratios, by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

The stock is also on the exclusive list of Dividend Kings.

PPG’s remarkable dividend consistency gives it broad appeal to the more conservative members of the dividend growth investing community.

Indeed, the company’s strong business model ensures a very safe dividend payment and room for steady dividend increases each year. This is still very much the case today.

This article will analyze PPG’s investment prospects in detail and determine whether the company merits a buy recommendation at current prices.

Business Overview

PPG Industries was founded in 1883 as a glass manufacturer and distributor. The company’s name, Pittsburgh Plate Glass, refers to its original operations.

Over time, PPG has made remarkable strides to become a leader in the paints and coatings industry.

With annual revenues of about $16 billion, PPG’s only competitors of similar size are fellow Dividend Aristocrat Sherwin-Williams (SHW) and Dutch paint company Akzo Nobel (AKZOY).

Thanks to its worldwide operating presence and focus on technology and innovation, PPG Industries has grown to such an impressive size.

On January 31st, 2025, PPG Industries reported fourth-quarter and full year results for the period ending December 31st, 2024.

Source: Investor Presentation

For the quarter, revenue declined 4.6% to $3.73 billion, which was $241 million less than expected. Adjusted net income of $375 million, or $1.61 per share, compared to adjusted net income of $372 million, or $1.56 per share, in the prior year. Adjusted earnings-per-share was $0.02 below estimates.

For the year, revenue from continuing operations decreased 2% to $15.8 billion while adjusted earnings-per-share of $7.87 was up slightly from $7.67 in 2023.

Fourth-quarter organic revenue growth fell 2% as pricing was flat and volume was down 2%. Global Architectural Coatings’s revenue, formerly part of Performance Coatings, fell 7% to $881 million. Volume declined 2%, pricing was flat, and currency exchange reduced results by 5%.

Performance Coatings grew 2% to $1.26 billion as volume and pricing offset currency exchange. Aerospace demand remained high while protective and marine coatings were also up during the period.

The Industrial Coatings segment fell 9% to $1.59 billion due to weakness in U.S. and European industrial production.

PPG Industries repurchased ~$750 million of shares during 2024 and has $2.8 billion, or ~10.7% of its current market capitalization, remaining on its share repurchase authorization.

For 2025, the company expects organic sales to be higher by a low single-digit percentage and adjusted earnings-per-share in a range of $7.75 to $8.05. At the midpoint, this would represent a small improvement from 2024.

Growth Prospects

A company’s ability to increase revenues and profits is largely a function of its capital allocation.

In recent years, PPG has spent billions of dollars buying its next generation of growth. It tries to maintain a somewhat balanced capital allocation strategy, but it is also not afraid to spend big on acquisitions when opportunities present themselves.

PPG has spent much more of its deployed cash on share repurchases than its competitors, which has been a major source of earnings-per-share growth over time.

Acquisitions have been a key growth driver for PPG for many years. That growth has come at a cost, namely an increase in the company’s debt.

PPG is now virtually exclusively a coatings business. In recent years, the company has transformed away from legacy businesses like glass and chemicals, leaving it with a portfolio of coatings products that collectively generate nearly $16 billion in annual revenue. These businesses have largely seen improvements in margins in recent years.

Source: Investor Presentation

Its track record suggests that its underlying business is likely to continue growing at a satisfactory rate for the foreseeable future. In the past decade, the company has grown its earnings-per-share at an average rate of just under 5%, but this growth rate expands somewhat to 6.7% when looking at just the last five years.

Given its strong fundamentals and focus on coatings, we believe investors can reasonably expect 7% adjusted earnings-per-share growth from PPG Industries through full economic cycles.

However, PPG’s performance is likely to suffer during periods of economic recession. The good news is that we would likely see such an event as a buying opportunity for this high-quality business.

Competitive Advantages & Recession Performance

PPG enjoys several competitive advantages. It operates in the paints and coatings industry, which is economically attractive for several reasons. First, these products have high profit margins for manufacturers.

They also have low capital investment, which results in significant cash flow. As discussed above, PPG has used this significant cash flow over time.

Given all this, it makes sense that only two coatings companies (Sherwin-Williams and PPG Industries) are on the Dividend Aristocrats list.

That said, the paint and coatings industry is not recession-resistant because it depends on healthy housing and construction markets. This impact can be seen in PPG’s performance during the 2007-2009 financial crisis:

• 2007 adjusted earnings-per-share: $2.52
• 2008 adjusted earnings-per-share: $1.63 (35% decline)
• 2009 adjusted earnings-per-share: $1.02 (37% decline)
• 2010 adjusted earnings-per-share: $2.32 (127% increase)

PPG’s adjusted earnings-per-share fell by more than 50% during the last major recession and took two years to recover.

As PPG’s 2020 results showed, the decline in new construction is the dominant factor during a recession. The 2020 recession was no different, as PPG faced factory shutdowns and severely reduced consumer demand, although that proved to be transitory.

While this Dividend Aristocrat’s long-term prospects remain bright, investors should be willing to accept volatility in a recession.

Valuation & Expected Total Returns

We are forecasting earnings-per-share of $7.90 for the fiscal year of 2025, putting the price-to-earnings ratio at 14.6. This is below our fair value estimate of 19 times earnings, meaning PPG is undervalued today.

As such, we expect total returns from valuation expansion to increase by 5.5% annually over the next five years.

In total, we project that PPG will return 14.6% annually through 2030, stemming from 7% earnings growth and the starting yield of 2.4%, along with a 5.5% annualized return from an expanding P/E multiple.

Given this, we continue to rate PPG a buy.

Final Thoughts

PPG Industries has many of the characteristics of a very high-quality business. Its proven business model has allowed the company to weather any recession.

It also has a significant international presence and multiple catalysts for future growth. Lastly, it has increased its dividend for more than 50 years.

PPG’s dividend outlook is exemplary and we see many more years of dividend increases on the horizon. With expected annual returns approaching 15%, we rate PPG stock a buy.

If you are interested in finding high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 6th, 2025 by Nathan Parsh

The Dividend Aristocrats consist of companies that have raised their dividends for at least 25 years in a row. Over the decades, many of these companies have become huge multinational corporations, but not all of them.

You can see the full list of all 69 Dividend Aristocrats here.

We created a full list of all Dividend Aristocrats, along with important financial metrics like price-to-earnings ratios and dividend yields. You can download your copy of the Dividend Aristocrats list by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

Dover Corporation (DOV) has raised its dividend for 69 consecutive years, one of the longest dividend growth streaks in the stock market.

The company has achieved such an exceptional dividend growth record thanks to its strong business model, resilience to recessions, and steady long-term growth.

There is room for continued dividend raises each year going forward, but on the other hand the stock appears to be overvalued right now.

Business Overview

Dover is a diversified global industrial manufacturer that offers its customers equipment and components, consumable supplies, aftermarket parts, software, and digital solutions.

It has annual revenues of nearly $8 billion, with just over half of its revenues generated in the U.S., and operates in five segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions, and Climate & Sustainability Technologies.

On January 30th, 2025, Dover reported fourth-quarter and full-year results. Revenue grew 1% for the quarter to $1.93 billion, which was $20 million less than expected. Adjusted earnings-per-share of $2.20 compared unfavorably to $2.45 in the prior year, but this was $0.12 ahead of estimates. For the year, revenue improved 1% to $7.75 billion while adjusted earnings-per-share of $8.29 compared to $8.80 in 2023.

For the quarter, organic revenue declined 0.3% year-over-year, but bookings grew by 7%. Engineered Products had organic growth of 2% due to gains in vehicle aftermarket and fluid dispensing were offset by shipment timings in aerospace and defense.

Clean Energy & Fueling increased 8% due to higher shipments and new orders in clean energy. Volume improvements for aboveground retail fueling equipment also aided results.

Image & Identification was up 1% due to demand for core marking and coding printers, consumables, services, and aftermarket.

Revenue for Pumps and Process Solutions grew 3% due to higher demand for thermal connectors, precision components, and single-use biopharma components.

Climate & Sustainability Technologies was the company’s lone weak spot, as revenue fell 13%. U.S. CO2 systems reached a new record, but declines in European markets more than offset this strength. Bookings were up 16% for the quarter.

Overall, Dover enters 2025 with strong momentum in its business.

Source: Investor Presentation

Dover expects adjusted earnings-per-share in a range of $9.30 to $9.50 for 2025. At the midpoint, this would represent 13.4% growth from 2024. Organic revenue growth is  projected to be in a range of 3% to 5%.

Growth Prospects

Dover has pursued growth by expanding its customer base and through bolt-on acquisitions. To reshape its portfolio and maximize its long-term growth, Dover routinely executes a series of bolt-on acquisitions and occasional divestments.

The management team is constantly focused on delivering the most value to shareholders through portfolio transformation, which has generally been successful. The company’s prospects for 2025 also look strong in every aspect of its business.

Source: Investor Presentation

Today, the company is a highly diversified industrial company with an attractive growth profile. In addition, Dover is also likely to enhance its earnings per share via opportunistic share repurchases.

We see 8% long-term earnings-per-share growth in the years to come, driven primarily by revenue increases, with a boost from share repurchases reducing the float.

Competitive Advantages & Recession Performance

Dover is a manufacturer of industrial equipment. The company offers highly engineered products that are critical to its customers. Switching to another supplier is also uneconomic for its customers because the risk of lower performance is material.

Therefore, Dover essentially operates in niche markets, which offer the company a significant competitive advantage. This competitive advantage helps explain Dover’s consistent long-term growth trajectory.

On the other hand, Dover is vulnerable to recessions due to its reliance on industrial customers. In the Great Recession, its earnings per share were as follows:

• 2007 earnings-per-share of $3.22
• 2008 earnings-per-share of $3.67 (14% increase)
• 2009 earnings-per-share of $2.00 (45% decline)
• 2010 earnings-per-share of $3.48 (74% increase)

Dover got through the Great Recession with just one year of decline in its earnings per share, and the company almost fully recovered from the recession in 2010.

Given its sensitivity to economic cycles, it is impressive that Dover has grown its dividend for 69 consecutive years.

Another reason is management’s conservative dividend policy, which targets a payout ratio of around 30%. This policy provides a wide margin of safety during rough economic periods. The expected payout ratio for 2025 is just 22%.

Overall, Dover will undoubtedly continue to raise its dividend for many more years thanks to its low payout ratio, decent recessions resilience, and healthy balance sheet.

Valuation & Expected Returns

Dover is expected to generate earnings-per-share of $9.40 for 2025. That means the stock trades at 19.8 times this year’s earnings, which is higher than our estimate of fair value at 18 times earnings.

That implies a ~1.9% annual headwind to total returns from valuation compression over the next five years.

Including 8% expected annual earnings-per-share growth, the 1.1% current dividend yield, and a 1.9% annualized compression of the price-to-earnings ratio, we expect Dover to offer 6.9% average annual return over the next five years.

This puts Dover stock into the territory of a hold rating.

Final Thoughts

Dover has an impressive dividend growth record, with nearly seven decades of dividend raises. This is an impressive achievement, particularly given the company’s dependence on industrial customers, who tend to struggle during recessions.

Dover has consistently grown its earnings per share over the years, which has translated into annual dividend increases.

This strategy gives the company ample room to continue growing for many more years. The stock is slightly overpriced, meaning it earns a hold rating.

Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:

If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 7th, 2025 by Nathan Parsh

We believe the Dividend Aristocrats are the “cream of the crop” of the U.S. stock market. The Dividend Aristocrats are a group of S&P 500 stocks that have increased their dividends for at least 25 years, among other requirements.

With this in mind, we created a list of all 69 Dividend Aristocrats, along with important financial metrics such as dividend yields and price-to-earnings ratios.

You can download your free list of all 69 Dividend Aristocrats by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

We review all the Dividend Aristocrats each year. Next up, we will review the food and beverage giant PepsiCo (PEP).

The stock offers a solid 3.6% dividend yield and has increased its dividend for over 50 years in a row. The company’s dividend is very safe, and the stock is suitable for risk-averse income investors.

PepsiCo’s valuation is well below its historical average, and it continues to post solid results.

Business Overview

Pepsi-Cola was created in the late 1890s by Caleb Bradham, a North Carolina pharmacist. Meanwhile, Frito-Lay, Inc. was formed in 1961 from the merger of Frito Company and the H. W. Lay Company. In its current form, PepsiCo came together as a result of the 1965 merger of Pepsi-Cola and Frito-Lay.

Today, PepsiCo is a global food and beverage giant with a market capitalization above $215 billion and approximately $92 billion in annual revenue.

Its business is split roughly 60-40 in terms of food and beverage revenue. It is also balanced geographically between the U.S. and the rest of the world.

Source: Investor Presentation

PepsiCo has a large portfolio and owns many popular brands. Some of the company’s major brands include Pepsi and Mountain Dew sodas and non-sparkling beverages like Pure Leaf, Tropicana, Gatorade, and bottled water.

In addition to PepsiCo’s core beverage brands, it also has a large snacks business under the Frito-Lay brand. The company has also built a portfolio of healthier foods, including Quaker, Naked, and Sabra.

On February 4th, 2025, PepsiCo reported fourth-quarter and full-year results for the period ending December 31st, 2024. For the quarter, revenue decreased 0.3% to $27.8 billion, which was $110 million below estimates. Adjusted earnings-per-share of $1.96 compared favorably to $1.78 in the prior year and was $0.02 better than expected.

For the year, revenue grew 0.4% to $91.9 billion while adjusted earnings-per-share of $8.16 compared to $7.62 in 2023. Currency exchange reduced revenue by 2.0% and earnings-per-share by 4%.

Organic sales were up 2.1% for the quarter and 2.0% for the year. For the quarter, volume for both food and beverage were up 1%. PepsiCo Beverages North America’s revenue was unchanged, but volume fell 3%. Frito-Lay North America declined 2% while volume was also down 3%. Quaker Foods North America was down 2%.

PepsiCo provided an outlook for 2025 as well, with the company expecting mid-single-digit growth for adjusted earnings-per-share growth.

Growth Prospects

PepsiCo has a long history of steady growth. Even in a challenging environment due to declining soda consumption, PepsiCo has continued its consistent growth.

We believe PepsiCo will generate 6% adjusted earnings-per-share growth per year over the next five years. Going forward, two of PepsiCo’s most promising catalysts are growth in healthier foods and beverages and emerging markets.

Large soda companies like PepsiCo have had to adapt to a more health-conscious consumer. To do this, PepsiCo has shifted its portfolio toward healthier foods that are resonating more strongly with changing consumer preferences.

In addition, PepsiCo has a huge growth opportunity in emerging markets like China, Africa, India, and Latin America.

Source: Investor Presentation

These are under-developed regions of the world with large consumer populations and high economic growth rates.

International markets (particularly emerging ones) have been a growth driver over the past few years.

Last quarter, revenue in Europe was up 7%, aided largely by a 3% increase in beverage volume and a 1% improvement in food volume. Revenue in Latin America increased 4%, Africa/Middle East/South Asia was up 14%, and the Asia Pacific/Australia/New Zealand/China region grew 1%.

Competitive Advantages & Recession Performance

PepsiCo has numerous competitive advantages, including strong brands and a global scale. In all, PepsiCo has ~20 individual brands that each collect at least $1 billion in annual revenue. Strong brands give PepsiCo optimal shelf space at retailers and pricing power.

PepsiCo’s financial strength also allows the company to invest in research and development and advertising to retain its competitive advantages.

For example, PepsiCo invests billions each year in research and development to innovate new products and packaging designs. In addition, PepsiCo regularly spends more than $2 billion each year on advertising to maintain market share and build brand equity with consumers.

PepsiCo’s competitive advantages and strong brands make the company highly profitable, even during recessions. Food and beverages always retain a certain level of demand, which is why the company held up so well during the Great Recession.

PepsiCo’s earnings-per-share throughout the Great Recession of 2007-2009 are listed below:

• 2007 earnings-per-share of $3.34
• 2008 earnings-per-share of $3.21 (3.9% decline)
• 2009 earnings-per-share of $3.77 (17% increase)
• 2010 earnings-per-share of $3.91 (3.7% increase)

As you can see, PepsiCo’s earnings-per-share declined only modestly in 2008. The company then increased earnings by nearly 20% in 2009, which is very impressive. Earnings continued to grow once the recession ended.

The company reported strong growth in 2020 and 2021 when the coronavirus pandemic sent the U.S. economy into a recession. Therefore, PepsiCo is a recession-resistant business.

Valuation & Expected Returns

We expect PepsiCo to generate earnings per share of $8.59 for 2025. Based on this, the stock trades for a price-to-earnings ratio of 18.3. Our fair value estimate is a price-to-earnings ratio of 24.0. Therefore, PEP stock appears undervalued. Multiple expansion could add 5.6% to yearly annual returns over the next five years.

Earnings-per-share growth and the stock’s dividend yield will also drive total returns. We expect PepsiCo to grow earnings-per-share each year by 6%. In addition, PepsiCo also has a 3.6% current dividend yield.

The combination of valuation changes, earnings growth, and dividends results in total expected returns of 14.6% per year over the next five years.

PepsiCo’s dividend is secure, with a projected payout ratio of about 66% for 2025. This gives PepsiCo enough room to continue increasing the dividend at a rate in line with the growth rate of its adjusted EPS.

Given the total return potential and the company’s overall quality, we rate shares of PepsiCo as a buy.

Final Thoughts

PepsiCo is a very strong business with several category-leading brands. Investing heavily in new products and acquisitions will likely continue growing sales and earnings for many years.

Shareholders should continue to benefit from PepsiCo’s strong business through annual dividend increases. Few other companies in the consumer staples sector can match its dividend growth history. PepsiCo recently achieved Dividend King status in February 2022.

We believe that PepsiCo remains a valuable holding for a dividend growth portfolio.

Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:

If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 7th, 2025 by Bob Ciura

Oil and gas royalty trusts are now offering exceptionally high distributions to their investors, resulting in much higher yields than the ~1.3% average dividend yield of the S&P 500.

We have created a spreadsheet of high dividend stocks with dividend yields of 5% or more…

You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:

 

In this article, we will discuss the prospects of the 5 highest-yielding royalty trusts.

Table of Contents

You can instantly jump to any specific section of the article by using the links below:

High-Yield Royalty Trust No. 4: Permian Basin Royalty Trust (PBT)

Permian Basin Royalty Trust is an oil and gas trust, which was founded in 1980. In 2023, about 55% of output was oil and 45% was gas, but 85% of revenues came from oil.

PBT is a combination trust: unit holders have a 75% net overriding royalty interest in Waddell Ranch Properties in Texas, which includes several oil and gas wells; and a 95% net overriding royalty interest in the Texas Royalty Properties, which includes various oil wells.

The trust’s assets are static in that no further properties can be added. The trust has no operations but is merely a pass through vehicle for the royalties. PBT had royalty income of $54.4 million in 2022 and $29.0 million in 2023.

In mid-November, PBT reported (11/12/24) financial results for the third quarter of fiscal 2024. The average realized price of oil significantly improved over the prior year’s period. Given also high operating costs at Waddell Ranch properties in last year’s quarter, distributable income per unit more than doubled, from $0.07 to $0.17.

Click here to download our most recent Sure Analysis report on Permian Basin Royalty Trust (PBT) (preview of page 1 of 3 shown below):

High-Yield Royalty Trust No. 3: Permianville Royalty Trust (PVL)

Permianville Royalty Trust (PVL) was incorporated in 2011 and is based in Houston, Texas. It operates as a statutory trust and owns a net profits interest representing the right to receive 80% of the net profits from the sale of oil and natural gas production from properties located in the states of Texas, Louisiana and New Mexico.

It has a market capitalization of $63 million. The trust’s assets are static in that no further properties can be added. In addition, the trust is passive, as it has no control over operating costs and the rate of production.

In mid-November, PVL reported (11/14/24) financial results for the third quarter of fiscal 2024. Oil and gas volumes grew 27% and 19%, respectively, thanks to new Permian wells but the trust was hurt by excessive costs in previous quarters, which were carried forward to the third quarter.

As a result, distributable income decreased -39% over the prior year’s quarter.

Click here to download our most recent Sure Analysis report on PVL (preview of page 1 of 3 shown below):

High-Yield Royalty Trust No. 2: Cross Timbers Royalty Trust (CRT)

Cross Timbers Royalty Trust is an oil and gas trust (about 50/50), set up in 1991 by XTO Energy. Its unitholders have a 90% net profit interest in producing properties in Texas, Oklahoma, and New Mexico; and a 75% net profit interest in working interest properties in Texas and Oklahoma.

In mid-November, CRT reported (11/13/24) results for the third quarter of fiscal 2024. Gas volumes increased 17% over the prior year’s quarter thanks to timing of receipts of Oklahoma net profit interests but oil volumes declined -23%.

In addition, the average realized price of gas dipped -14%. As a result, distributable cash flow (DCF) per unit decreased 37%.

Click here to download our most recent Sure Analysis report on Cross Timbers Royalty Trust (CRT) (preview of page 1 of 3 shown below):

High-Yield Royalty Trust No. 1: PermRock Royalty Trust (PRT)

PermRock Royalty Trust is a trust formed in late 2017 by Boaz Energy, a company that is focused on the acquisition, development and operation of oil and natural gas properties in the Permian Basin. The Trust benefits from the unique characteristics of the Permian Basin, which is the most prolific oil-producing area in the U.S.

On November 13th, 2024, PermRock Royalty reported third quarter 2024 results for the period ending September 30th, 2024. Net profits income received by the trust was $1.55 million, compared to $1.69 million in Q3 2023. The average realized sale price of oil improved 11% year-over-year, while natural gas plummeted by 23%.

Distributable income for the trust came to $1.34 million, down 9% from $1.47 million in the prior year period and distributable income per unit of $0.11 was lower by a penny from $0.12 in the prior year.

Click here to download our most recent Sure Analysis report on PermRock Royalty Trust (PRT) (preview of page 1 of 3 shown below):

Final Thoughts

On the surface, oil and gas royalty trusts are attractive as they widely offer higher yields than the S&P 500 average.

However, oil and gas prices are infamous for their dramatic swings. Oil prices have been on a downtrend for the past several months.

Therefore, investors should be prepared for much lower distributions from royalty trusts going forward. They should also be aware of the excessive risk of all these trusts near the peak of their cycle.

The ideal time to buy these trusts is during a severe downturn of the energy sector, when these stocks plunge and thus become deeply undervalued from a long-term perspective.

As mentioned above, all the oil and gas trusts are highly risky due to the natural decline of their production and their sensitivity to the prices of oil and gas.

If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:

High-Yield Individual Security Research

Other Sure Dividend Resources

Updated on March 7th, 2025 by Bob Ciura

Kevin O’Leary is Chairman of O’Shares Investment Advisors, but you probably know him as “Mr. Wonderful”.

He can be seen on CNBC as well as the television show Shark Tank. Investors who have seen him on TV have likely heard him discuss his investment philosophy.

Mr. Wonderful looks for stocks that exhibit three main characteristics:

1. First, they must be quality companies with strong financial performance and solid balance sheets.
2. Second, he believes a portfolio should be diversified across different market sectors.
3. Third, and perhaps most important, he demands income—he insists the stocks he invests in pay dividends to shareholders.

You can download the complete list of all of O’Shares Investment Advisors stock holdings by clicking the link below:

 

OUSA owns stocks that display a mix of all three qualities. They are market leaders with strong profits, diversified business models, and they pay dividends to shareholders.

The list of OUSA portfolio holdings is an interesting source of quality dividend growth stocks.

This article analyzes the fund’s largest holdings in detail.

Table of Contents

The top 10 holdings from the O’Shares FTSE U.S. Quality Dividend ETF are listed in order of their weighting in the fund, from lowest to highest.

No. 10: Cisco Systems (CSCO)

Dividend Yield: 2.6%

Percentage of Portfolio: 3.36%

Cisco Systems is the global leader in high performance computer networking systems. The company’s routers and switches allow networks around the world to connect to each other through the internet. Cisco also offers data center, cloud, and security products.

On February 12th, 2025, Cisco announced a 2.5% dividend increase in the quarterly payment to $0.41. That same day, Cisco announced results for the second quarter of fiscal year 2025 for the period ending January 25th, 2025.

For the quarter, revenue grew 9.4% to $13.99 billion, which beat estimates by $120 million. Adjusted earnings-per-share of $0.94 compared favorably to adjusted earnings-per-share of $0.87 in the prior year and was $0.03 ahead of expectations.

Excluding the company’s recent acquisition of Splunk, total revenue grew 11% for the quarter. Networking fell 3% while Security grew 117%, Observability was up 47%, and Collaboration improved 1%. By region, the Americas increased 9%, Europe/Middle East/Africa was higher by 11%, and Asia-Pacific/Japan/China was up 8%.

Click here to download our most recent Sure Analysis report on Cisco Systems (CSCO) (preview of page 1 of 3 shown below):

No. 9: McDonald’s Corporation (MCD)

Dividend Yield: 2.2%

Percentage of OUSA Portfolio: 3.53%

McDonald’s is the world’s leading restaurant chain with 41,822 locations in about 119 countries at end of 2022. The highest store counts are in the US (13,449), China (5,903), Japan (2,982), France (1,560), and Canada (1,466).

Approximately 95% of the stores are franchised or licensed and the rest are company owned. However, the company owns about 55% of the real estate and 80% of the buildings in its network.

Total system sales were approximately $129.5B in 2023 and total revenue was around $25.5B in 2023.

On February 10th, McDonald’s reported Q4 2024 results. Total revenue came in at $6.38 billion, flat compared to Q4 2023, on 2% higher system-wide sales (adjusting for currency).

Diluted earnings were flat at $2.80 per share compared to $2.80 per share in comparable periods on pre-tax charges.

On a geographic basis, comparable sales were -1.4% in the US, +0.1% in the International Operated Markets, and +4.1% in the International Developmental Licensed Markets.

The firm’s focus on value deals and the McValue platform should boost traffic and sales.

Click here to download our most recent Sure Analysis report on MCD (preview of page 1 of 3 shown below):

No. 8: Merck & Co. (MRK)

Dividend Yield: 3.4%

Percentage of OUSA Portfolio: 3.81%

Merck & Company is one of the largest healthcare companies in the world. Merck manufactures prescription medicines, vaccines, biologic therapies, and animal health products.

Merck employs 68,000 people around the world and generates annual revenues of more than $63 billion.

Source: Investor Presentation

On February 4th, 2025, Merck announced fourth quarter and full year results for the period ending December 31st, 2024.

For the quarter, revenue improved 7% to $15.6 billion, which was $110 million above estimates. Adjusted earnings-per-share was $1.72 compared to $0.03 the prior year and $0.04 more than expected.

For the year, revenue increased 7% to $64.2 billion while adjusted earnings-per-share of $7.65.

Keytruda, which treats cancers such as melanoma that cannot be removed by surgery and non-small cell lung cancer, continues to be the key driver of growth for the company as sales for the drug were up 19% to $7.8 billion during the period.

Click here to download our most recent Sure Analysis report on MRK (preview of page 1 of 3 shown below):

No. 7: Alphabet Inc. (GOOGL)

Dividend Yield: 0.47%

Percentage of OUSA Portfolio: 3.92%

Alphabet is a technology conglomerate that operates several businesses such as Google search, Android, Chrome, YouTube, Nest, Gmail, Maps, and many more. Alphabet is a leader in many of the areas of technology that it operates.

On February 4th, 2025, Alphabet announced fourth quarter and full year results for the period ending December 31st, 2024. For the quarter, revenue grew 11.8% to $96.5 billion, but this was $170 million less than expected.

Adjusted earnings-per-share of $2.15 compared very favorably to $1.64 in the prior year and was $0.02 above estimates. For the year, revenue grew 14% to $350 billion while adjusted earnings-per-share of $8.04 compared to $5.80 in 2023.

Most businesses performed well during the period. For the quarter, revenue for Google Search, the largest contributor to results, grew 12.5% to $54 billion. YouTube ads increased 13.8% to $10.5 billion while Google Network declined 4.1% to just under $8 billion.

Click here to download our most recent Sure Analysis report on GOOGL (preview of page 1 of 3 shown below):

No. 6: MasterCard Inc. (MA)

Dividend Yield: 0.57%

Percentage of OUSA Portfolio: 4.13%

MasterCard is a world leader in electronic payments. The company partners with 25,000 financial institutions around the world to provide an electronic payment network. MasterCard has more than 3.1 billion credit and debit cards in use.

On January 30th, 2025, MasterCard announced fourth quarter and full year results for the period ending December 31st, 2024.

For the quarter, revenue improved 15.4% to $7.5 billion, which was $120 million above estimates. Adjusted earnings-per-share of $3.82 compared favorably to $3.18 in the prior year and was $0.13 more than expected.

For the year, revenue grew 12% to $28.2 billion while adjusted earnings-per-share of $14.60 compared to $12.26 in 2023.

On a local currency basis, gross dollar volumes for the quarter grew 12% worldwide to $2.56 trillion during the quarter, with the U.S. improving 9% and the rest of the world higher by 13%.

Cross border volumes remained strong, growing 20% from the prior year and 17% from Q3 2024.

Click here to download our most recent Sure Analysis report on Mastercard (preview of page 1 of 3 shown below):

No. 5: Microsoft Corporation (MSFT)

Dividend Yield: 0.86%

Percentage of OUSA Portfolio: 4.52%

Microsoft Corporation manufactures and sells software and hardware to businesses and consumers. Its offerings include operating systems, business software, software development tools, video games and gaming hardware, and cloud services.

In late January, Microsoft reported (1/29/25) financial results for the second quarter of fiscal 2025 (its fiscal year ends June 30th).

The company grew its revenue 12% over the prior year’s quarter. Growth came from Intelligent Cloud and Productivity & Business Processes, which grew 19% and 14%, respectively.

Sales of Azure, Microsoft’s high-growth cloud platform, grew 31%. Earnings-per-share grew 10%, from $2.94 to $3.23, and exceeded the analysts’ consensus by $0.13.

Click here to download our most recent Sure Analysis report on MSFT (preview of page 1 of 3 shown below):

No. 4: Johnson & Johnson (JNJ)

Dividend Yield: 3.0%

Percentage of OUSA Portfolio: 4.54%

Johnson & Johnson is a diversified health care company and a leader in the area of innovative medicines and medical devices Johnson & Johnson was founded in 1886 and employs nearly 132,000 people around the world.

On January 22nd, 2025, Johnson & Johnson announced fourth quarter and full year results for the period ending December 31st, 2024.

Source: Investor Presentation

For the quarter, revenue grew 5.1% to $22.5 billion, which beat estimates by $50 million. Adjusted earnings-per-share of $2.04 compared to $2.29 in the prior year, but this was $0.02 above expectations.

For the year, revenue grew 4.3% to $88.8 billion while adjusted earnings-per-share of $9.98 was up slightly from the prior year. Results included adjustments related to the costs of acquisitions.

Click here to download our most recent Sure Analysis report on JNJ (preview of page 1 of 3 shown below):

No. 3: Home Depot (HD)

Dividend Yield: 2.5%

Percentage of OUSA Portfolio: 4.95%

Home Depot was founded in 1978 and since that time has grown into a juggernaut home improvement retailer with over 2,300 stores in the US, Canada and Mexico that generate around $153 billion in annual revenue.

Home Depot reported fourth quarter 2025 results on February 25th, 2025. The company reported sales of $39.7 billion, up 14% year-over-year. Comparable sales in the quarter increased 0.8%.

Net earnings equaled $3.0 billion, or $3.02 per share, compared to $2.8 billion, or $2.82 per share in Q4 2023. Adjusted EPS was $3.13.

Average ticket improved 0.3% compared to last year, from $88.87 to $89.11. Additionally, sales per retail square foot rose 1.2% from $550.50 to $556.90.

The company spent $649 million on common stock repurchases in 2024, compared to $8.0 billion in the prior year.

Click here to download our most recent Sure Analysis report on HD (preview of page 1 of 3 shown below):

No. 2: Apple (AAPL)

Dividend Yield: 0.42%

Percentage of OUSA Portfolio: 5.14%

Apple is a technology company that designs, manufactures, and sells products such as iPhones, iPads, Mac, Apple Watch and Apple TV. Apple also has a services business that sells music, apps, and subscriptions.

On January 30th, 2025, Apple reported financial results for the first quarter of fiscal year 2025 (Apple’s fiscal year ends the last Saturday in September).

Total sales grew 4% over the prior year’s quarter, to a new record of $124.3 billion, thanks to sustained growth in iPhone, iPad and Wearables across all regions.

Earnings-per-share grew 10%, from $2.18 to $2.40, and exceeded the analysts’ consensus by $0.05. Notably, Apple has missed the analysts’ estimates only once in the last 25 quarters.

Going forward, Apple’s earnings growth will be driven by several factors. One of these is the ongoing cycle of iPhone releases, which creates lumpy results. In the long run, Apple should be able to grow its iPhone sales, albeit in an irregular fashion.

Click here to download our most recent Sure Analysis report on AAPL (preview of page 1 of 3 shown below):

No. 1: Visa Inc. (V)

Dividend Yield: 0.70%

Percentage of OUSA Portfolio: 5.86%

Visa is the world’s leader in digital payments, with activity in more than 200 countries. The company’s global processing network provides secure and reliable payments around the world and is capable of handling more than 65,000 transactions a second.

On January 30th, 2025, Visa reported first quarter 2025 results for the period ending December 31st, 2024. (Visa’s fiscal year ends September 30th.)

For the quarter, Visa generated revenue of $9.5 billion, adjusted net income of $5.5 billion and adjusted earnings-per-share of $2.75, marking increases of 10%, 11% and 14%, respectively.

These results were driven by a 9% gain in Payments Volume, a 16% gain in Cross-Border Volume and an 11% gain in Processed Transactions. Visa processed 63.8 billion transactions in the quarter.

Click here to download our most recent Sure Analysis report on Visa (preview of page 1 of 3 shown below):

Final Thoughts

Kevin O’Leary has become a household name due to his appearances on the TV show Shark Tank. But he is also a well-known asset manager, and his investment philosophy largely aligns with Sure Dividend’s.

Specifically, Mr. Wonderful typically invests in stocks with large and profitable businesses, with strong balance sheets and consistent dividend growth every year.

Not all of these stocks are currently rated as buys in the Sure Analysis Research Database, which ranks stocks based on expected total return due to a combination of earnings per share growth, dividends, and changes in the price-to-earnings multiple.

However, several of these 10 stocks are valuable holdings for a long-term dividend growth portfolio.

Additional Resources

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 5th, 2025 by Felix Martinez

Automatic Data Processing (ADP) might not be a household name, but it should be for dividend growth investors. ADP has raised its dividend each year for 50 years in a row.

ADP is a member of the Dividend Aristocrats, a group of 69 stocks in the S&P 500 Index with 25+ years of consecutive dividend increases. ADP has one of the longest streaks of dividend increases among the Dividend Aristocrats.

We have created a full list of all 69 Dividend Aristocrats, along with important metrics like P/E ratios and dividend yields, which you can download by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

ADP’s long history of dividend growth is the result of a strong business model and durable competitive advantages. This has led to domination of its core markets for decades. To quote legendary investor Warren Buffett, ADP has a wide economic moat.

This article will review ADP’s fundamentals and discuss whether the stock is currently trading at an attractive enough valuation.

Business Overview

ADP is a business outsourcing services company. It was founded in 1949 and began with a single client. In the 75 years since ADP has grown into the leading payroll and human resource outsourcing company. It has over 1 million clients in more than 140 countries worldwide.

ADP provides services to companies of all sizes, including payroll, benefits administration, and human resources management. These services are highly demanded, as companies prefer to outsource these functions to better focus on their core business activities.

ADP has a leading position across its strategic pillars and a highly diversified client list.

The company has undergone significant restructuring in recent years. In 2014, ADP spun off its human capital management business, which now trades as CDK Global (CDK).

ADP posted fiscal second-quarter earnings on January 29th, 2025. ADP reported an 8% revenue increase to $5.0 billion in Q2 FY25, with net earnings up 10% to $963 million. Adjusted EBIT rose 11% to $1.3 billion, expanding the margin to 25.2%. Diluted EPS grew 10% to $2.35. The company reaffirmed its full-year outlook, expecting 6%-7% revenue growth and 7%-9% adjusted EPS growth.

Employer Services revenue grew 8%, with a 90-basis-point margin increase, while PEO Services revenue rose 8% but saw a 140-basis-point margin decline. Interest on client funds jumped 21% to $273 million, supported by higher balances and yields. Strong new business bookings and interest in client funds drove overall growth.

For FY25, ADP expects Employer Services revenue growth of 6% – 7% and margin expansion. PEO Services revenue is projected to rise 5% – 6% despite margin pressure. Client funds interest revenue is forecasted at $1.14-$1.16 billion. ADP remains focused on sustainable growth and shareholder value.

Source: Investor Presentation

Growth Prospects

Automatic Data Processing has compounded its adjusted earnings-per-share at a rate of more than 11% per year over the last decade, which we believe it can come close to matching moving forward.

Beyond 2023, we believe the company can deliver 9% annualized growth in earnings-per-share over full economic cycles. Much of this growth is likely to be driven by the company’s Professional Employer Organization (PEO) Services segment, which continues to deliver strong growth.

Importantly, this revenue growth has been accompanied by meaningful margin expansion, which means that the segment’s growth has outsized the firm’s bottom line.

In addition, share buybacks are a low single-digit tailwind to annual EPS growth, and we expect that to continue.

Source: Investor Presentation

Two key long-term growth catalysts for ADP are continued payroll increases and expanding regulations.

The number of employees on ADP clients’ payrolls continues to grow, and we believe this will continue for the foreseeable future. Next, the increasingly complex regulatory environment creates significant compliance costs for businesses; this also helps provide ADP with long-term growth.

Competitive Advantages & Recession Performance

Many competitive advantages fuel ADP’s growth. ADP has a deep connection with its customers and enjoys a strong reputation for customer service, which helps keep customer retention very high.

ADP enjoys a tremendous scale that its competitors cannot match. As a global company, ADP is uniquely positioned to help companies with employees on multiple continents.

In addition, ADP benefits from a recession-resistant business model. ADP’s earnings-per-share during the Great Recession are shown below:

• 2007 earnings-per-share of $1.83
• 2008 earnings-per-share of $2.20 (20% increase)
• 2009 earnings-per-share of $2.39 (8.6% increase)
• 2010 earnings-per-share of $2.39 (flat)

ADP increased earnings-per-share in 2008 and 2009, which is a rare accomplishment. ADP’s continued growth during the Great Recession is because businesses still need payroll and human resource services, even during an economic downturn.

The company continued to perform relatively well in the 2020 economic downturn caused by the coronavirus pandemic. ADP remained highly profitable during the pandemic, which allowed it to maintain its streak of annual dividend increases.

The necessary nature of ADP’s services helps insulate the company from the effects of a recession. Given ADP’s size and scale, we believe it will perform well during the next recession.

Valuation & Expected Returns

We forecast adjusted earnings-per-share of approximately $9.95 for fiscal 2025. Based on the current share price of ~$310, the stock has a price-to-earnings ratio of 31.2.

We see fair value for ADP at 29 times earnings, meaning the stock appears to be overvalued. This implies a slight headwind to total returns in the coming years from valuation expansion.

If the P/E multiple expands from 31.2 to 29 over the next five years, it would decrease annual returns by 1.5% per year.

We expect ADP to grow earnings-per-share by 9% annually over the next five years. In addition, the stock has a current dividend yield of 1.9%.

The combination of earnings growth, dividends, and valuation expansion results in a total expected return of 9.4% per year over the next five years.

Given its strong fundamentals, ADP will almost certainly continue increasing its dividend for many years to come. ADP maintains a target payout ratio of 55%- 60% of annual earnings, so the payout is very safe with room to grow.

Final Thoughts

ADP is a strong business. It maintains a large list of customers and holds a top position in the industry. This gives it a wide economic “moat,” a term popularized by investing legend Warren Buffett.

Indeed, ADP’s wide moat keeps competitors at bay, leading to high profitability levels.

There should be plenty of growth going forward, both in terms of earnings and dividends. Regulations continue to become more complex.

And, as the economy expands, companies are adding employees and increasingly use ADP’s services. If a recession occurs, ADP should continue to increase its dividend, as customers will still need its services.

With an expected rate of return above 9.4%, we rate ADP stock a hold.

If you are interested in finding high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Updated on March 6th, 2025 by Bob Ciura

“KISS” stands for Keep It Simple Stupid.

The “Stupid” part isn’t meant to be an insult. It’s a reminder that smart people can make “stupid” mistakes when things are over-complicated.

“Simplicity is the ultimate sophistication”​
– Attributed to Leonardo Da Vinci

Retirement investing should be kept simple in order to minimize mistakes. At its core, retirement investing is all about creating passive income.

At Sure Dividend, we focus on dividend-paying stocks to build a growing passive income stream.

One way for investors to find great dividend stocks is to focus on those with the longest histories of raising dividends.

With this in mind, we created a downloadable list of over 130 Dividend Champions, which have increased their dividends for over 25 consecutive years.

You can download your free copy of the Dividend Champions list, along with relevant financial metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the link below:

 

Investors are likely familiar with the Dividend Aristocrats, a group of 69 stocks in the S&P 500 Index with 25+ consecutive years of dividend increases.

Meanwhile, investors should also familiarize themselves with the Dividend Champions, which have also raised their dividends for at least 25 years in a row.

While their length of dividend increases is the same, leading to some overlap, there are also some important differences between the Dividend Aristocrats and Dividend Champions.

As a result, the Dividend Champions list is much more expansive. There are many high-quality Dividend Champions that are not included on the Dividend Aristocrats list.

This article will discuss 10 Dividend Champions that are ideal candidates for investors looking to keep investing simple with high-quality dividend stocks.

Table of Contents

The 10 stocks below have all increased their dividends for over 25 years, with Dividend Risk Scores of ‘C’ or higher. In addition, they have dividend payout ratios below 70% which indicates dividend sustainability.

Lastly, the 10 stocks have dividend growth rates above 5%.

You can instantly jump to any specific section of the article by clicking on the links below:

The 10 KISS stocks have been ranked by expected total annual return over the next five years, from lowest to highest.

KISS Stock #10: Tennant Co. (TNC)

• 5-year expected returns: 12.3%

Tennant Company is a machinery company that produces cleaning products and that offers cleaning solutions to its customers.

In the US, the company holds the market leadership position in its industry, but the company also sells its products in more than 100 additional countries around the globe.

Source: Investor Presentation

Tennant Company reported its fourth quarter earnings results on February 19. Revenues of $328 million during the quarter, which was 6% more than the top line number from the previous year’s quarter.

This was slightly better than the recent trend, as revenue had grown less on a year-over-year basis during the previous quarter.

Tennant Company generated adjusted earnings-per-share of $1.52 during the fourth quarter, which was less than what the analyst community had forecast, and which was down compared to the previous year.

Management is forecasting that adjusted earnings-per-share will fall into a range of $5.70 to $6.20 in 2025.

Click here to download our most recent Sure Analysis report on TNC (preview of page 1 of 3 shown below):

KISS Stock #9: Sysco Corp. (SYY)

• 5-year expected returns: 13.5%

Sysco Corporation is the largest wholesale food distributor in the United States. The company serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities.

Source: Investor Presentation

On January 28th, 2025, Sysco reported second-quarter results for Fiscal Year (FY)2025. The company reported a 4.5% increase in sales for the second quarter of fiscal year 2025, reaching $20.2 billion.

U.S. Foodservice volume grew by 1.4%, while gross profit rose 3.9% to $3.7 billion. Operating income increased 1.7% to $712 million, with adjusted operating income growing 5.1% to $783 million. Earnings per share (EPS) remained at $0.82, while adjusted EPS grew 4.5% to $0.93.

The company reaffirmed its full-year guidance, projecting sales growth of 4%-5% and adjusted EPS growth of 6%-7%.

Click here to download our most recent Sure Analysis report on SYY (preview of page 1 of 3 shown below):

KISS Stock #8: Target Corp. (TGT)

• 5-year expected returns: 13.5%

Target was founded in 1902 and now operates about 1,850 big box stores, which offer general merchandise and food, as well as serving as distribution points for the company’s e-commerce business.

Target posted third quarter earnings on November 20th, 2024. Third quarter revenue was $25.67 billion, up 1.1% year-over-year, but missing estimates by $230 million. Adjusted earnings-per-share came to $1.85, which missed estimates by a staggering 45 cents, or 20%.

For Q3, comparable sales were up just 0.3%, missing estimates of 1.5%. Guest traffic was up 2.4% in the quarter while digital comparable sales rose 10.8%. Gains there were led by Target Circle 360 and Drive Up.

Operating margin was 4.6% of revenue, down from 5.2% a year ago. Gross margins were off 20 basis points to 27.2% of revenue, reflecting higher digital fulfillment and supply chain costs.

Click here to download our most recent Sure Analysis report on TGT (preview of page 1 of 3 shown below):

KISS Stock #7: Bank OZK (OZK)

• 5-year expected returns: 13.8%

Bank OZK is a regional bank that offers services such as checking, business banking, commercial loans and mortgages to its customers in Arkansas, Florida, North Carolina, Texas, Alabama, South Carolina, New York and California.

On January 2nd, 2025, Bank OZK announced a $0.42 quarterly dividend, representing a 2.4% raise over the last quarter’s payment and a 10.5% raise year-over-year. This marked the company’s 58th consecutive quarter of raising its dividend.

In mid-January, Bank OZK reported (1/16/25) results for the fourth quarter of 2024. Total loans and deposits grew 13% each over the prior year’s quarter. Net interest income grew 2% over the prior year’s quarter, despite higher deposit costs.

Earnings-per-share grew 4%, from $1.50 to a new all-time high of $1.56, and exceeded the analysts’ consensus by $0.11. Bank OZK has exceeded the analysts’ consensus in 17 of the last 19 quarters and has posted record earnings-per-share for 9 consecutive quarters.

Management expects a recovery of net interest margin from mid-2025 thanks to lower interest rates and deposit costs.

Click here to download our most recent Sure Analysis report on OZK (preview of page 1 of 3 shown below):

KISS Stock #6: Becton Dickinson & Co. (BDX)

• 5-year expected returns: 13.8%

Becton, Dickinson & Co. is a global leader in the medical supply industry. The company was founded in 1897 and has 75,000 employees across 190 countries.

The company generates about $20 billion in annual revenue, with approximately 43% of revenues coming from outside of the U.S.

On February 5th, 2025, BD released results for the first quarter of fiscal year 2025, which ended December 31st, 2024. For the quarter, revenue increased 9.8% to $5.17 billion, which was $60 million more than expected.

Source: Investor Presentation

On a currency neutral basis, revenue improved 9.6%. Adjusted earnings-per-share of $3.43 compared favorably to $2.68 in the prior year and was $0.44 ahead of estimates.

For the quarter, U.S. grew 12% while international was up 6.7% on a reported basis. Excluding currency, international was higher by 6.3%. Organic growth was up 3.9% for the period.

The Medical segment grew 17.1% organically to $2.62 billion, mostly due to gains in Mediation Management Solutions and Medication Delivery Solutions. Life Science was up 0.5% to $1.3 billion.

Click here to download our most recent Sure Analysis report on BDX (preview of page 1 of 3 shown below):

KISS Stock #5: SEI Investments Co. (SEIC)

• 5-year expected returns: 13.9%

SEI Investments was founded in 1968 and over the last 50+ years has grown into a global provider of investment processing, investment management, and investment operations solutions for financial institutions and advisors.

SEI has about $1.6 trillion combined in assets under administration and management. The company should produce about $2.3 billion in revenue this year.

SEI posted fourth quarter and full-year earnings on January 29th, 2025, and results were mixed. Revenue soared 15% year-on-year to $557 million, beating estimates narrowly.

Adjusted earnings-per-share came to $1.19, missing estimates by a penny. Earnings were up 31% from the year before.

Management noted reduced earnings in Q4 from higher incentive compensation, the timing of stock-based compensation, and forex translation. Despite this, earnings in Q4 were very near a record for SEIC.

Consolidated operating income soared 43% year-over-year on strong revenue and expense management, with each segment seeing higher profits.

Click here to download our most recent Sure Analysis report on SEIC (preview of page 1 of 3 shown below):

KISS Stock #4: Nordson Corp. (NDSN)

• 5-year expected returns: 14.1%

Nordson was founded in 1954 in Amherst, Ohio by brothers Eric and Evan Nord, but the company can trace its roots back to 1909 with the U.S. Automatic Company.

Today the company has operations in over 35 countries and engineers, manufactures, and markets products used for dispensing adhesives, coatings, sealants, biomaterials, plastics, and other materials, with applications ranging from diapers and straws to cell phones and aerospace.

Source: Investor Presentation

On December 11th, 2024, Nordson reported fourth quarter results for the period ending October 31st, 2024. For the quarter, the company reported sales of $744 million, 4% higher compared to $719 million in Q4 2023, which was driven by a positive acquisition impact, and offset by organic decrease of 3%.

Industrial Precision saw sales decrease by 3%, while the Medical and Fluid Solutions and Advanced Technology Solutions segments had sales increases of 19% and 5%, respectively.

The company generated adjusted earnings per share of $2.78, a 3% increase compared to the same prior year period.

Click here to download our most recent Sure Analysis report on NDSN (preview of page 1 of 3 shown below):

KISS Stock #3: PPG Industries (PPG)

• 5-year expected returns: 14.8%

PPG Industries is the world’s largest paints and coatings company. Its only competitors of similar size are Sherwin-Williams and Dutch paint company Akzo Nobel.

PPG Industries was founded in 1883 as a manufacturer and distributor of glass (its name stands for Pittsburgh Plate Glass) and today has approximately 3,500 technical employees located in more than 70 countries at 100 locations.

On January 31st, 2025, PPG Industries announced fourth quarter and full year results for the period ending December 31st, 2024. For the quarter, revenue declined 4.6% to $3.73 billion and missed estimates by $241 million.

Adjusted net income of $375 million, or $1.61 per share, compared favorably to adjusted net income of $372 million, or $1.56 per share, in the prior year. Adjusted earnings-per-share was $0.02 below expectations.

Source: Investor Presentation

For the year, revenue from continuing operations decreased 2% to $15.8 billion while adjusted earnings-per-share totaled $7.87.

PPG Industries repurchased ~$750 million worth of shares during 2024 and has $2.8 billion, or ~10.3% of its current market capitalization, remaining on its share repurchase authorization. The company expects to repurchase ~$400 million worth of shares in Q1 2025.

For 2025, the company expects adjusted earnings-per-share in a range of $7.75 to $8.05.

Click here to download our most recent Sure Analysis report on PPG (preview of page 1 of 3 shown below):

KISS Stock #2: SJW Group (SJW)

• 5-year expected returns: 17.8%

SJW Group is a water utility company that produces, purchases, stores, purifies and distributes water to consumers and businesses in the Silicon Valley area of California, the area north of San Antonio, Texas, Connecticut, and Maine.

SJW Group has a small real estate division that owns and develops properties for residential and warehouse customers in California and Tennessee. The company generates about $750 million in annual revenues.

Source: Investor Presentation

On February 27th, 2025, SJW Group announced fourth quarter and full year results for the period ending December 31st, 2024. For the quarter, revenue improved 15.5% to $197.8 million, which topped expectations by $10.3 million.

Earnings-per-share of $0.74 compared favorably to earnings-per-share of $0.59 in the prior year and was $0.19 ahead of estimates. For the year, revenue grew 12% to $748.4 million while earnings-per-share of $2.87 compared to $2.68 in 2023.

Click here to download our most recent Sure Analysis report on SJW (preview of page 1 of 3 shown below):

KISS Stock #1: Stepan Co. (SCL)

• 5-year expected returns: 19.9%

Stepan manufactures basic and intermediate chemicals, including surfactants, specialty products, germicidal and fabric softening quaternaries, phthalic anhydride, polyurethane polyols and special ingredients for the food, supplement, and pharmaceutical markets.

It is organized into three distinct business lines: surfactants, polymers, and specialty products. These businesses serve a wide variety of end markets, meaning that Stepan is not beholden to just a handful of industries.

Source: Investor presentation

The surfactants business is Stepan’s largest by revenue, accounting for ~68% of total sales in the most recent quarter. A surfactant is an organic compound that contains both water-soluble and water-insoluble components.

Stepan posted fourth quarter and full-year earnings on February 19th, 2025, and results were mixed once again. Revenue was down 1.2% year-on-year to $526 million, but did beat estimates by almost $5 million. Adjusted earnings-per-share came to 12 cents, which missed estimates by 21 cents.

Global sales volume was off 1% year-over-year as double-digit growth in surfactants was offset and then some by demand weakness in polymers. Surfactants were up 3% year-over-year in Q4 to $379 million. Polymer net sales fell 12% to $130 million.

The company managed to generate about $13 million in pre-tax cost savings during the quarter, and about $48 million for the full year.

Click here to download our most recent Sure Analysis report on SCL (preview of page 1 of 3 shown below):

Final Thoughts

In order for a company to raise its dividend for at least 25 years, it must have durable competitive advantages, highly profitable businesses, and leadership positions in their respective industries.

This is why the Dividend Champions are attractive for long-term investors.

Plus, quality dividend growth stocks allow investors to simply their investing process, with a buy-and-hold approach that can create wealth over the long-run.

Additional Reading

The Dividend Champions list is not the only way to quickly screen for stocks that regularly pay rising dividends.

• The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 54 stocks with 50+ years of consecutive dividend increases.
• The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
• The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.

Updated on March 5th, 2025 by Felix Martinez

There are just 69 stocks on the list of Dividend Aristocrats, members of the S&P 500 Index that have raised their dividends for 25+ consecutive years.

We view the Dividend Aristocrats as among the best dividend stocks to buy and hold.

You can download a free list of all 69 Dividend Aristocrats, along with important metrics like dividend yields and price-to-earnings ratios, by clicking on the link below:

 

Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.

Ecolab (ECL) is an example of a company that possesses all of these qualities. Ecolab has a long history of growth, and has increased its dividend for over 33 years.

This article will examine the various factors behind Ecolab’s rise to prominence and our current rating of Ecolab stock.

Business Overview

Ecolab was created in 1923 when its founder Merritt J. Osborn invented a new cleaning product called “Absorbit”. This product cleaned carpets without the need for businesses to shut down operations to conduct carpet cleaning. Osborn created a company revolving around the product, called Economics Laboratory, or Ecolab.

Today, Ecolab is the industry leader, generating roughly $16 billion in annual sales.

Ecolab operates three major business segments: Global Industrial, Global Institutional, and Global Energy, each roughly equal in size. The business is diversified in terms of operating segments and geography. About 55% of the company’s sales take place outside North America.

In mid-February, Ecolab reported (2/11/25) financial results for the fourth quarter of fiscal 2024. Ecolab delivered a strong fourth quarter and record 2024 performance, with reported diluted EPS up 18% to $1.66 and adjusted EPS rising 17% to $1.81. Sales grew 2% to $4.0 billion, with organic sales up 4%, led by Industrial and Healthcare & Life Sciences. Operating income margins improved, with organic margin reaching 17.4% due to higher sales and strategic investments.

Source: Investor Presentation

Growth Prospects

Ecolab grew its earnings per share by 10.9% per year from 2011 to 2019. However, it declined in 2020 due to the pandemic and in 2022 due to high inflation. We view these headwinds as temporary and expect 10% average annual growth of earnings per share over the next five years.

Source: Investor Presentation

One of the company’s most important growth catalysts is acquisitions. In late 2021, Ecolab acquired Purolite for $3.7 billion in cash. Purolite sells high-end ion exchange resins for the separation of solutions in over 30 countries. It generates annual sales of approximately $400 million.

Ecolab has proven successful at integrating other acquisitions, so we remain positive about the company’s ability to do so in the future. Acquisitions such as these and organic investment have fueled steady earnings growth for decades.

We feel that the company is well-positioned to continue growing. Over the next five years, we expect ECL to grow earnings per share by 10% per year.

Competitive Advantages & Recession Performance

Ecolab’s many competitive advantages include scale, a strong reputation among its customers, and innovation. Ecolab serves more than 1 million customer locations spread across more than 170 countries. The company is not afraid to spend significant resources on research and development of new products and services.

Management refers to R&D spending as its “innovation pipeline.” Ecolab often spends more than $1 billion on this pipeline. Due in large part to this R&D spending, the company has more than 9,000 patents.

Ecolab’s R&D investments and intellectual property help the company stay ahead of the competition. These investments have created an incredibly strong business that can hold up very well even during economic downturns.

For clear evidence of Ecolab’s competitive advantages, look no further than its performance during the Great Recession:

• 2006 earnings-per-share of $1.43
• 2007 earnings-per-share of $1.66 (16% increase)
• 2008 earnings-per-share of $1.86 (12% increase)
• 2009 earnings-per-share of $1.99 (7% increase)
• 2010 earnings-per-share of $2.23 (12% increase)

Ecolab’s growth during the Great Recession was truly remarkable. Not only did the company generate positive earnings growth in each year of the recession, but it achieved double-digit earnings growth in three of those years.

Valuation & Expected Returns

Based on the current trading price of $269 and expected earnings-per-share of $7.55, Ecolab has a price-to-earnings ratio of 35.6. The stock has a ten-year average price-to-earnings ratio of 20. We have a target price-to-earnings ratio of 20. If shares of Ecolab were to return to our target valuation by 2030, this would reduce total returns by 10.7% per year.

The stock is in danger of experiencing a contraction of the valuation multiple, which would negatively impact total returns. Ecolab’s dividend will not likely represent a large portion of total returns. This is because the current dividend yield is just 0.9%. This is lower than the average dividend yield of the S&P 500 Index.

Ecolab’s dividend growth streak now totals 33 consecutive years.

A breakdown of potential five-year returns is as follows:

• 10.0% earnings growth
• 0.9% dividend yield
• 10.7% valuation reversion

We expect Ecolab to offer a total annual return of 0.2% through 2030. Valuation headwinds are likely to wear down most of the company’s potential returns from its earnings and dividend growth prospects.

While Ecolab is an attractive dividend growth stock due to its high rate of dividend increases, it is not as appealing for income investors or value investors.

Final Thoughts

Ecolab is not likely to be an attractive stock for investors interested solely in high levels of income. It is a very strong stock for investors interested in a recession-resistant business and dividend growth.

Ecolab has an excellent record of profitability and growth and is one of the few companies with a dividend growth streak of at least 25 years. That said, today might not be an ideal time to acquire shares in the company due to the lack of meaningful projected returns over the medium term. Therefore, we rate Ecolab’s shares as a Sell.

If you are interested in finding high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: