PizzaTrader Stock of the Month: February 2026

What a fabulous first month of the year for dividend investors - I hope everyone’s portfolio is performing well! Despite the positive shift in market sentiment to finally appreciate dividend growth companies for their full potential, the market always provides good opportunities if you are looking for them. Each month, I attempt to share the opportunities I find in the market to demonstrate how dividend growth investing drives significant compounding over time. This month’s featured stock is **Zoetis Inc. (ZTS)**. Disclosure: I own a position and presently intend to hold into the future. Disclaimer: For educational purposes only, not investment advice. ZTS earns income by developing and selling animal medicines, vaccines, and testing products. ZTS has coverage across a wide variety of animals and healthcare needs. These products generate very high margins to reward the significant investment required for research, development, and manufacturing. Dividend Highlights: \- The current dividend is $2.12 annually, translating to a yield of 1.66% at the current stock price of $127.42. \- ZTS has increased its dividend for a solid 13 consecutive years. \- The average dividend yield over the past 10 years has been 0.78%. Today’s investor will purchase a cash flow stream 113% more valuable than the long-term average. Many companies eventually transition from rapid growth to more stable growth, and Zoetis may be in the midst of this transition. As a result, it may be unlikely for ZTS to return to the long-term dividend yield. \- I typically aim for a 15% Chowder Ratio with new stock purchases. ZTS has a great Chowder Ratio of 17.9%! Investment Performance: \- An investor who bought $10,000 worth of ZTS 10 years ago and reinvested all dividends would have experienced total returns of 241.9% with a current value of $34,186. This failed to defeat a broad market index (like the S&P 500), which is always an important consideration when pursuing a portfolio of individual stock holdings. \- The 2016 investor initially bought the stock at a yield of 0.95%, expecting $0.38 per share in their first year of ownership. Today, that same investor is set to earn $2.12 per share, resulting in a yield on cost of 5.27%. This rapid increase in annual income shows why high dividend growth is so powerful. Patience has paid off for long-term investors! Future Outlook: \- While the future is always uncertain, investing in Zoetis comes with several potential rewards, including annual dividend increases, price improvements, and high likelihood for ongoing dividends. \- The company’s annual dividend increase is typically announced during December for the upcoming year. The dividend increase for 2026 was a respectable 6.0%. \- Assuming a steady dividend growth rate of 9% until 2031, reflecting the company’s slower growth, and a dividend yield of 1.25%, which is more conservative than the historical average yield of 0.78%, today’s investor might have stock worth $262.40 (106% price return) and earn a yield on cost of 2.57% after 5 years of investment. \- The company’s dividend payout ratio is only 36%, so there is plenty of room for ongoing dividend growth in addition to other cash needs the company has, including R&D, acquisitions, or share buybacks. Conclusion: \- For the above reasons, ZTS is my choice for Stock of the Month and is well-positioned to continue its long-term creation of shareholder wealth. Portfolio Performance: \- The 2025 Stock of the Month portfolio is up 20.5% in price and has earned 1.80% in dividends for a total return (dividends not reinvested) of 22.3%. This is favorable to both SCHD’s 19.2% total return and VOO’s 14.1% total return over the same time period. Links to my previous selections are included in the comments. Share your thoughts on ZTS or what my March pick should be in the comments below!