My Top Dividend Stock For April
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After yet another booming month on the market, believe it or not, there are still some good deals out there to be found (three of which I’m telling you about here). One company I find particularly interesting is Zoetis (ZTS), which doesn't get as much attention as it deserves.
In case you’ve never heard of this company before, Zoetis was established in 2013 as a spin-off from Pfizer (PFE), and since then has secured its spot as the top dog in animal health.
Source: Investor Presentation
Regarding the company’s share price performance, 2024 has not been kind to Zoetis. The stock is down a notable 11% just in the last month and is seeing a 14.4% decline year-to-date, falling behind many other companies in the sector.
Source: Seeking Alpha | Zoetis compared to its peers
On the bright side, I actually think the drop in share price makes Zoetis a more attractive investment now than it was at the start of the year. The company is still financially firing on all cylinders and has actually become more profitable over time. This is exactly what you want to see, and here are some of those stats:
Since 2014, the gross profit margin has expanded from about 65% to approximately 70%.
In the same time period, the operating margin has seen a significant boost from 23.7% to a whopping 36%.
Also, the net income margin has more than doubled, going from 12.2% to 27.4%.
And the cherry on top: Zoetis is a dividend growth behemoth. Over the last five years, they’ve increased the dividend by an average rate of 23.5% per year — that’s insane!
Source: Seeking Alpha | Dividend stats
Having said all of that—financials and dividend stats aside—why might Zoetis be worth investing in?
First, as mentioned earlier, Zoetis is the world leader in the animal health sector, a field that is currently seeing growing demand driven by the "human-animal bond."
Pet owners, particularly Gen-Z and Millennials, prioritize the health and wellness of their pets. Many consider them part of the family, so even during economic downturns, pet owners should still be willing to spend money to treat their pets when something goes wrong, which adds some resilience to the company.
Source: Investor Presentation
Additionally, Zoetis helps meet the world's growing need for protein by creating products that support the health of livestock. This actually makes up 35% of their revenue.
With the global population expected to grow by nearly 2 billion people by 2050, the demand for animal protein is sure to grow as well, and so should demand for the products that Zoetis makes.
Source: Investor Presentation
Overall, I think the future looks bright for Zoetis, making it my top dividend stock pick for April. I actually just added this company to my watchlist, and plan to dive a bit deeper into it over the coming weeks and months.
At any rate, I want to hear from you: Which stocks do you have your eye on for this upcoming month? Write to me here and let me know.
And a big thank you to all of the readers who responded to last week's newsletter! You can read some of the responses down below in the "Hot Takes" section. 👇
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This Dividend King Is A TICKING TIME BOMB
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SINCE YOU ASKED 💬
"Should we let our runners run, or would it be wise to take some profits and allocate it to the laggers, or use it to build new positions?"
- Allie | Email submission
I think if you're sitting on some unrealized gains from an investment, it could mean that you own a piece of a valuable business worth holding on to. If it's a great company, and its delivering good results, why would you want to sell it?
Having said that, there will be times where it may make sense to lock in some gains and reinvest some of your profits elsewhere. It all just depends on what you think is the best use of your capital, and where you think the best opportunities are.
Have a question? Ask me here to see it featured in an upcoming newsletter.
HOT TAKES 🔥
Last week, I asked readers about their best performing stock of all-time. Here are some of the responses:
Nigel said: Thus far, my best performing stock is ALLY and I have a 58% total gain with it.
Pat said: My best performing stock is DIS just because I've held it so long (my entire life. Thanks, grandparents!). But my best purposely purchased stock winner winner chicken dinner is BX. It's been a 4 bagger for me and has kicked out a sweet dividend the entire time.
James said: Currently my best performing stock is SPXC which I invested in a while back it’s not a dividend stock but it’s been on a tear. It’s up 70% right now.
Matthew said: I was lucky enough to stumble into NVDA about 2-3 years ago and was able to ride the wave up and it’s been more than a 5 bagger! Has helped get my portfolio over the ever difficult 100k mark.
Lye said: My best-performing stock is WSM and I sincerely have to thank you for the recommendation. I only have 4 shares of Williams-Sonoma, but I purchased the stock in April 2023 at an average cost of slightly more than $122. The stock is up 147% as of today.
