Back during the gold rush, thousands of miners flocked to California and points west to find their fortunes. While some found riches, the real winners were the shops providing all the ‘picks and shovels’ needed to mine for gold. These days, that business model still exists and it can be found in our latest Best Dividend Stocks List pick.
While our pick doesn’t actually sell shovels to miners, it does sell ingredients to food and consumer goods manufacturers. These flavors, scents, and other additives form the bases for many of the products we consume in our daily lives. From lavender-scented candles and shampoo to mint-flavored gum and carpet cleanser, our pick provides the bases for many products. This fact has allowed our new pick to become a dividend powerhouse over its history. In fact, over the last decade, our pick has managed to grow its payout by nearly 200%.
Even better is that our pick has been pretty recession-resistant given that it serves a wide variety of end users, industries, and product types.
And our pick continues to grow as well. Thanks to its dominance and size, our latest pick has long been an M&A superstar. This has allowed it to add plenty of bolt-on revenues and tangential operating segments. This includes its biggest merger ever that should close within the next year. This buyout will add tons of new capacity and products, and make it the top dog in the sector by a wide margin. For investors, the moves will only further strengthen its profits, dividends, and cash flows.
In the end, our pick allows investors to play a recession-proof supplier to the entire food and consumer products industry.
To summarize, here are five reasons why you should own this stock:
1. It is one of the largest players in the additives industry, pulling in more than $5 billion in sales last year.
2. A wide moat helps it provide products for many end users across multiple industries.
3. It has smartly used M&A to grow its bottom line, making it a dominant player in its niche.
4. It has been a great dividend stock through its history and has grown its payout by 200% since the Great Recession.
5. It has a healthy payout ratio of 52% and growing yield of 2.21%.
Removal of a Defense Name
Change is afoot. As protests and clashes continue in the wake of George Floyd’s death, police reform is firmly on the table. This includes a hefty dose of budget cuts and demilitarization of the nation’s police forces. Unfortunately, that fact has sent our pick in the defense sector lower in recent weeks – too low in fact. With its overall Dividend.com Rating now drifting below our thresholds, we were forced to remove the defense name from our list.
Our Best Dividend Stocks List has 20 of the highest-rated stocks by our proprietary Dividend.com Rating system. Go Premium to find out the entire list.
