Wall Street predicts this dividend-paying stock will skyrocket by more than 40%

Baseball players and fans alike know all about the game of sacrifice. It is when a batter hits the ball (either at the bunting or outfield) that gets an out for the opposing team but advances one or more base runners.

Sometimes investors may think that some sort of sacrifice game is necessary when buying dividend stocks. Growth is excluded in order to advance the goal of receiving a stable income.

While some dividend-paying stocks may require a trade-off between growth and income, it’s not a sacrifice you necessarily have to make. Here is a dividend stock that Wall Street says will skyrocket over 40%.

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Lawns, gardens and weeds

The 12-month consensus course objective for Scotts Miracle Gro (NYSE: SMG) is $ 267. That’s almost 42% above the current share price.

If you have a lawn or garden, you are probably very familiar with Scotts. The company has been in business since 1868, when Orlando McLean Scott opened a store in Marysville, Ohio. Scott started out by selling equipment, but soon expanded into selling seeds to farmers. In the early 1900s, he was selling seeds to consumers who were not also farmers.

Fast forward to today. Scotts products are sold in major retail stores in the United States. Turf Builder and WeedEx help keep lawns in good condition. Miracle-Gro plant food and soil support the growth of home gardens. The company also markets branded work gloves, landscaping fabrics, blowers, mulchers, lawn mowers and other tools and accessories.

But Scotts Miracle-Gro no longer just focuses on preventing weeds in lawns and gardens. She operates a thriving business focused on helping weed growth. I’m referring to the company’s Hawthorne unit, which ranks as the primary supplier to the cannabis industry. Hawthorne markets a wide range of hydroponic products, including lighting, ventilation, nutrient, water treatment, and more.

Behind the optimism of Wall Street

Why do Wall Street analysts think Scotts Miracle-Gro has so much leeway? There are several reasons.

On the one hand, the stock has fallen more than 20% from its peak reached earlier this year. The main likely factor behind this pullback is that Scott’s year-over-year comparisons are expected to weaken in the second half of this year. However, that is to be expected given the huge tailwinds COVID-19 closures provided to sales of lawn and garden products last year.

Some analysts also believe Scotts’ home lawn and garden business is expected to experience solid growth. For example, analysts at Raymond James rate the stock as a strong buy in part because they believe that “the dry, seasonal weather in late spring and early fall creates a very conducive environment for trading. lawn and garden “.

The main reason behind Wall Street’s bullish outlook, however, is likely the seemingly unstoppable momentum of Scotts’ Hawthorne unit. Marijuana legalization efforts have seen enormous success with 36 states legalizing medical cannabis and 18 states legalizing recreational marijuana. Each of these markets presents potential growth opportunities for Hawthorne.

About this dividend

Scotts Miracle-Gro launched a dividend program in 2005. Since then, the company has paid a dividend quarterly. It has also distributed a few special dividends to shareholders over the years, most recently in 2020.

Granted, the Scotts dividend is unlikely to be the first thing that attracts investors. Its yield is currently at a relatively low level of 1.3%. However, the company has increased its payments every year for the past decade.

More importantly, Scotts offers the kind of growth prospects that most dividend-paying stocks can’t. For investors who want an income as well as an opportunity to profit from the strong growth in the cannabis market, this Wall Street darling might be just the ticket.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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