Key Points
Shares of Zoetis have been roughly average performers over the past decade.
The shares seem appealingly valued at recent levels.
Zoetis has a lot of growth potential.
Ah, 10 years ago. It was 2015, and selfie sticks and hoverboards were all over. Apple debuted its Apple Watch to much fanfare, and...perhaps you invested in shares of Zoetis (NYSE: ZTS) stock? If you did, here's how you would have fared over the past decade.
You would have done pretty well: Your investment would have grown by a total of 227%, which is an average annual rate of 12.6%. So, $1,000 invested 10 years ago would now be $3,270. That might please you, if you're aware that over many decades, the stock market has averaged annual gains of close to 10%. Unfortunately for Zoetis investors, though, over the past decade, the S&P 500 averaged annual gains of 12.7%, a smidge above Zoetis' returns.
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Worse still, if you'd only held Zoetis stock for the past one, or three, or five years, you would have lost money. Zoetis shares sank by an annual average rate of 18.7%, 4.25%, and 0.43%, respectively, over those periods.
Don't despair, though -- because anyone buying or holding onto Zoetis shares right now has plenty to look forward to, as the company has lots of growth potential. Recall that Zoetis used to be the animal health division of Pfizer, specializing in vaccines and diagnostic equipment and the like, and was spun off in 2013. Today it's leading in market share across multiple animal health segments and it has made some strategic acquisitions, as well.
Image source: Getty Images.
Another appealing detail is that Zoetis is somewhat recession-proof, because taking care of animals' health is not optional for many people. Livestock need to stay healthy for business purposes and pets are often considered valuable members of families.
Finally, Zoetis is a dividend-paying stock, with a recent dividend yield of 1.3%. That may not seem like much, but the total annual payout, recently $1.93 per share, is up from $1.30 in 2022 and $0.50 in 2018. Shares seem undervalued at recent levels, too, with the recent forward-looking price-to-earnings (P/E) ratio of 24 is well below the five-year average of 32.
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Selena Maranjian has positions in Apple and Pfizer. The Motley Fool has positions in and recommends Apple, Pfizer, and Zoetis. The Motley Fool has a disclosure policy.