Some of the great stock stories are not the high-flying small-cap stocks that struck it big quickly. There are some companies that work in the background with extensive operations that quietly make money year after year.
You might even know their name, yet not give them a second thought – unless you are an investor looking for a stable earnings generator to power your portfolio.
One of those stocks is Ansell Limited (ASX: ANN), a well-established company in the S&P ASX 200 Index (ASX: ^XJO). That name might sound familiar. Yes, it’s the glove and protective wear producer that may be better known for its condoms found in many drug stores, supermarkets and convenience stores.
Here are three reasons why the company continues to be a success and could be a good earner for you well into the future.
1) Products are constantly needed
Its wide array of products are usually only used once or for a limited number of times before they are disposed of and need to be replaced. You can imagine how many plastic latex gloves hospitals go through on a daily basis.
Similar to the basic business opportunity that made the Gillette company famous – and rich – for disposable razors, being the biggest supplier of disposable protective wear goods makes for a steady business.
2) Steadily growing earnings
Looking at the company’s past earnings performance, you would see revenue has been stable for many years, but interestingly earnings have been rising at a higher rate than revenue. That means the company is increasing its net profit margins. You want to see that in a company that produces comparatively low-cost items. It gives Ansell a good competitive advantage.
3) Growing dividends
With growing earnings, shareholders also enjoy rising dividends. The company has increased its dividend annually for the past ten years. The stock offers a 2.1% dividend yield now, but if the past track record for dividend growth is any indicator of future dividend payments, then the income returns will add up progressively over the years well into your retirement.