The Toro Company (NYSE: TTC) states that its purpose is to “help our customers enrich the beauty, productivity, and sustainability of the land.” Its sales range from mowers and turf maintenance equipment to irrigation solutions, underground construction equipment, and snow and ice management products.
Powered by No. 1 or No. 2 market-share positions in most of its product categories, Toro has delivered total returns of 4,930% since 2000 — rocketing past the S&P 500‘s returns of 560% over the same time.
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Over the last two years, though, Toro’s sales dipped 1% while its net income slid 10%, prompting the stock to plummet 30% from its all-time highs. This leaves the shares trading at their most reasonable valuation in nearly a decade and the dividend yield at a 10-year high of 1.7%.
That makes today the perfect time to consider this magnificent dividend growth stock.
Toro likes to use the quote, “Grass grows, snow falls, and infrastructure ages” to highlight the appeal of its essential products to prospective investors. Backing up this motto is the company’s undeniably steady operations, which result in a 5-year beta of 0.7 for Toro’s stock.
Measuring a company’s volatility compared to the broader market, Toro’s below-one beta shows that it is less turbulent than most stocks. This stability comes from the company’s diverse non-discretionary products that span a wide array of end markets.
Here is a breakdown of those end markets and why each makes Toro a resilient stock to own over the next decade.
Toro’s largest end market remains under pressure in 2024 as contractors and homeowners rein in purchases of big-ticket items amid higher interest rates and consumer spending uncertainty. This segment primarily generates sales via Toro’s dealer network and is inching closer to a rebound, with the company about 80% of the way back to “normal” field inventory levels.
Cyclical inventory fluctuations like this will always be a…
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