ZTS - Zoetis: A High-Quality Business And Fast Dividend Growth At A Reasonable Price

2024-07-03 03:46:14 ET

Summary

• Zoetis is a resilient company that shows strong growth even in times of economic challenges.
• The company is well-positioned in a growing market and has a strong product portfolio, including a new potential billion-franchise in osteoarthritis pain.
• ZTS has shown impressive dividend growth in recent years, and it is likely this will continue in the future, making it attractive for dividend investors with a long time horizon.
• Based on DCF analysis, the company currently trades around fair value.

Introduction

Investing in dividend growth stocks often means investing in high-quality businesses. Zoetis Inc. ( ZTS ) is a great company and an undisputed dividend growth beast.

I am impressed with the speed at which the company is growing its dividend, and I am confident that ZTS can continue to do so in the future. Maybe not at the same growth rate as now, but I certainly expect double-digit dividend growth for a long time.

In February, I wrote my first article about ZTS, where it was already clear that it is a quality company, but in my opinion, too richly valued. However, there was some negative news about their osteoarthritis drug Librela and the presence of possible negative side effects. The stock price fell so much that it dipped below my calculated fair value of $154. Therefore, I chose to initiate a position and add ZTS to my personal dividend growth portfolio....

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