Discover the Less Familiar Dividend Increase Share that has Soared an Impressive 218% since 2022
Discover the Less Familiar Dividend Increase Share that has Soared an Impressive 218% since 2022
I'm continually impressed by the large number of publicly-traded corporations that run rather ordinary operations, yet consistently generate market-crushing returns.
One of several examples of this remarkable trend is Oil-Dri of America (ODC 2.21%). Oil-Dri is a dominant, vertically integrated manufacturer and marketer of sorbent minerals (clay) and associated products.
Admittedly, nothing in this business description leaps out as a market-dominating opportunity. However, Oil-Dri's stock has tripled just in the last two years. Since 2000, it has almost tripled the total returns of the S&P 500 index, achieving "16-bagger" status.
Despite these significant past returns, I think Oil-Dri's future could be even brighter. Here's a brief overview of this lesser-known dividend growth stock and why it appears poised to outperform the market for many years to come.
Introducing Oil-Dri
For the past two years, Oil-Dri has made Forbes' list of "America's Most Successful Small Companies" and is finally garnering some well-deserved market interest. The company started mining clay in 1963 and presently operates facilities in six U.S. states, with reserves estimated to last at least another 40 years.
Leveraging these clay-mining sites, Oil-Dri serves five primary markets:
- Pet care (55% of sales): Oil-Dri holds patents for lightweight, scoopable litter, which it sells under the Cat's Pride, Jonny Cat, and KatKit brands. Following its 2024 acquisition of Ultra Pet, Oil-Dri also entered the crystal litter market, whose superior performance has sparked a rapid resurgence among cat owners.
- Fluids purification (21% of sales): Oil-Dri's clay products allow customers to process vegetable and edible oils, jet fuel, and biodiesel, as well as remove metals for the renewable diesel market.
- Industrial and sports (10% of sales): Oil-Dri's granular clay absorbents can be found controlling oil spills or leaks in mechanic's shops and garages, helping with drainage on sports fields, and building up pitching mounds and batter's boxes on baseball diamonds.
- Agriculture and horticulture (8% of sales): Oil-Dri's Agsorb and Verge granules aid in plant nutrition and protection.
- Animal health (6% of sales): Oil-Dri's Amlan International unit produces natural feed additives to keep animals healthy and shield them from toxins.
While Oil-Dri competes with numerous peers in these markets, its vertically integrated operations give it an edge. Moreover, the majority of the company's products are recurring purchases and mainstays for its clients, ensuring its sales remain relatively steady and robust for an industrial company.
Growth prospects and a data-driven strategy
Oil-Dri's blend of enticing growth possibilities and steadily improving profitability fuels my confidence in its future.
After spending $46 million to acquire Ultra Pet in May 2024, the company entered the rapidly expanding crystal cat litter market. This crystal litter market has more than quadrupled in size since 2018 and experienced a 8x increase in sales volume over the previous year compared to other litter types.
Oil-Dri currently boasts a 31% and 79% market share in the branded and private-label lightweight clay litter niches, respectively, and aims to replicate these profits within the crystal litter sector via Ultra Pet. Furthermore, Oil-Dri recently obtained the first-ever Environmental Protection Agency-approved antibacterial cat litter that kills 99.9% of odor-causing bacteria, further distinguishing itself from competitors.
Concurrently, renewable diesel production in the U.S. has surged from 800 million gallons in 2020 to 6 billion in 2025, making Oil-Dri's fluid purification products more crucial than ever. By using renewable diesel as a drop-in fuel, greenhouse gas emissions are reduced up to 80%. Oil-Dri is constructing new plants to meet the soaring demand from the industry, which should continue to drive growth.
Best of all, these growth areas aren't jeopardizing profitability. In fact, profit margins are increasing while Oil-Dri expands its product line.
Much of this success stems from the company's commitment to optimizing its sales mix, a process it refers to as "Moneyball." At Oil-Dri's first-quarter earnings, Chief Financial Officer Susan Kreh highlighted this motivation, stating, "It's like 'Moneyball' for a mining company – focusing on products that add value and shedding those that are not profitable."
This dedication to improvement has led to new highs in profit margins not seen in over 20 years.
This enhanced profitability supports a 1.4% dividend yield that utilizes only 18% of the company's net income. In other words, Oil-Dri could triple its dividend payments without depleting half of its profits – a testament to its current financial strength and potential for future growth. Although management has historically been conservative with dividend increases, its most recent raise was 7%, hinting at a potential for faster dividend growth in tandem with profitability.
Trading at just 14 times earnings with sales growth of 10% annually over the last five years – and 15% in the most recent quarter – Oil-Dri could represent a fantastic investment if its profitability proves to be a long-term trend.
In terms of finance and investing, Oil-Dri's stock has tripled in the last two years and has nearly tripled the total returns of the S&P 500 index since 2000, demonstrating its robust performance in the market. Furthermore, Oil-Dri's dividend yield is currently at 1.4%, indicating a potential for future growth and making it an attractive investment option for income-focused investors.