13d • General discussion
Undervalued Dividend Producer?
Zoetis
NYSE: ZTS
Animal health — Currently near a five-year low on litigation risk (Librela, its osteoarthritis biologic) and a guidance cut, not on a broken business or a broken dividend.
Price $77.83
Yield 2.72%
Fwd P/E 12.5x
TTM FCF payout 37.6%
2013 →
Raised every year since IPO
Free cash flow vs. dividends paid — 20 quarters
Total company, $ millions · Q3 2021 – Q2 2026
Q2 2023 is a noise quarter, not a trend: operating cash flow briefly air-pocketed (working-capital timing, not a dividend problem), pushing that single quarter's payout ratio to roughly 1,018%. It snapped back under 30% the next quarter, and the two-quarter stretch in early 2022 (elevated capex, ~80% payout) resolved the same way. The TTM ratio has stayed comfortably under 40% every year since 2023.
The dividend itself has grown from roughly $117M paid per quarter in late 2021 to about $223M now — an ~8%/year pace — while FCF has grown faster and more cyclically, which is why the payout ratio has trended down even as the dividend keeps rising. The real risk here doesn't look like coverage; it's Librela litigation and new competitive entrants in companion-animal pharma, which is exactly why the stock is cheap relative to its own history. Is it a buy? What's your opinion?
1
0 comments
Undervalued Dividend Producer?
skool.com/empire-wealth-builder
Elle Gagnon (GenX Elle): Author & creator of Empire Wealth Builder, helping pre-retirees build dividend income security via coaching and community.
Powered by