No Matter What the Next Growth Trend Is, This Dividend Stock Will Be at the Heart of It

There's a certain amount of uncertainty in any stock pick. New trends emerge, others fizzle out, and it's difficult to identify which companies are going to emerge as the big winners of the next generation.

But the dividend stock we're bringing you today dominates an industry that is every bit as certain as death and taxes.

No matter what growth trend we're talking about - cloud computing, renewable energy, or even driverless vehicles - all of them require space for their operations. And that space needs to be cleaned.

So the United States' top manufacturer of commercial cleaning equipment is the ultimate pick-and-shovel play to deliver reliable returns for decades, no matter which big-name companies emerge as the top success stories in that time.

We're not just talking about aesthetics here, either.

Cleaning commercial spaces is critical for safety. It improves floor traction to prevent slips and falls. If it sounds trivial, it's not. Those accidents cost U.S. companies about $70 billion annually in compensation and medical costs.

This company also reduces exhaust, fumes, and any small particles that can damage employees' health. And it can even improve worker morale and productivity by signaling an employer's concern for its facilities.

The pick we're bringing you today has been in business for nearly 150 years and has been a major innovator in the cleaning industry.

It developed the first vacuum-equipped power sweeper in the 1940s, and more recently, it has developed technology to turn plain water into a bubbly cleaning solution.

That's why this stock is your best backdoor play on every major growth industry on the planet.

Best of all, it just got a top score from our Money Morning Stock VQScore™ system.

So you can expect the share price to pop in the short term - and then collect dividends for years to come...

After 150 Years, This Company's Innovations Keep It on Top of Its Industry

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Tennant Co. (NYSE: TNC) was founded as a Minneapolis woodworking shop in 1870. It eventually came to specialize in wood flooring before moving into floor-cleaning equipment.

Today, Tennant has over 4,000 employees on five continents, and it holds a leading U.S. market share for commercial cleaning equipment.

Perhaps the most impressive thing about Tennant's century and a half in business is its continued commitment to innovation.

Take its ec-H2O technology, first made available in 2008. This allows cleaning staffs to generate cleaning solution on site, using electricity to infuse water with microscopic, acidic "nanobubbles" that attack dirt and residue. Aside from convenience, this eliminates waste from packaged chemicals.

Then there's Tennant's ReadySpace quick-drying technology, which can deep-clean carpets and have them ready for foot traffic again in 30 minutes.

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Tennant is also a leader in robotic cleaning machines. This is a lot more complicated than the Roomba you have at home. Tennant's autonomous T7 scrubber can cover areas as big as a shopping mall. It can work alone or in a fleet, with or without human cooperation. And even as it learns a territory, it can improvise if unexpected obstacles are introduced.

In fact, Walmart Inc. (NYSE: WMT) just inked a deal in April to use T7s in its megastores. Terms haven't been disclosed yet, but with over 5,000 Walmart and Sam's Club stores in the United States alone, this looks like a major windfall for Tennant.

Products like the T7 can make a significant dent in labor costs, which take up an estimated 60% to 65% of most cleaning budgets. But many of Tennant's products are designed to make life easier for cleaning staff, too.

That's because products are made to be easy to use, cutting down on training time and increasing productivity. Large-capacity cleaning machines keep crews on the floor rather than constantly refilling. Ergonomic design prevents the repetitive stress injuries that plague cleaning crews, and low-noise machines prevent hearing damage.

When it comes to this essential but often overlooked industry, Tennant is the No. 1 player in the game.

And right now is the perfect time to buy.

Now Is the Time to Buy TNC

TNC is down a little over 25% in the last 12 months. That's in large part due to the downturn late last year, and shares have not yet recovered.

But the weak stock performance is not an accurate reflection of Tennant's value, and investors aren't likely to sleep on this one much longer.

Tennant is coming off back-to-back years of double-digit sales growth. Earnings per share (EPS) jumped 41.6% in 2018 and beat expectations by 22.5% in the first quarter of this year.

In spite of the company's market share dominance, multiple valuation metrics are currently at a discount compared with the rest of the industry.

TNC's price-to-book ratio is at 79% of industry average. And both price-to-sales and enterprise-value-to-sales come in at roughly half of industry average.

If you buy your shares now, you can lock in a 1.5% yield. Then you can not only look forward to years of reliable growth - regardless of what new technology catches fire - but also a sizeable gain once the rest of the market sees the value it left on the table.

And if you're looking for more ways to profit, we've got you covered...

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About the Author

Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.

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