It’s uncommon to discover a UK inventory that has excellent potential for each development and dividend traders. And it’s virtually unattainable to seek out it buying and selling at a cut price price. 

Tristel (LSE:TSTL) nevertheless, may be such a inventory. It’s at a 52-week low, however the enterprise is rising effectively and the corporate simply elevated its dividend by 8% – with extra to return.

What’s Tristel?

Tristel’s a inventory that traders in all probability aren’t paying a lot consideration to. However I believe they may very well be lacking out in the event that they don’t a minimum of take a better look.

The corporate makes disinfectant merchandise for medical gear. And what units it aside is its use of chlorine dioxide – reasonably than chlorine – in its merchandise.

Supply: Tristel Investor Presentation February 2025

Chlorine dioxide (CIO₂) has a number of benefits over chlorine (CI₂). Microorganisms can’t construct resistance to CIO₂, it’s extra environment friendly than CI₂, and it doesn’t produce dangerous by-products.

Briefly, Tristel’s merchandise are each efficient and require quite a lot of technical data. And I believe this may very well be a robust mixture going ahead.

Outlook

Tristel’s been profitable within the UK disinfection market. However the massive alternative is it’s making an attempt to make progress with is the US, which may very well be enormous for a enterprise at the moment valued at £165m. This nevertheless, isn’t simple.

The corporate’s options are costly and convincing hospitals to alter from trusted suppliers providing cheaper merchandise may be troublesome. Regardless of this, Tristel’s made progress. Its disinfectant for ultrasound probes has been given regulatory approval and the agency has issued a submitting for its ophthalmic units remedy.

It’s price noting that, whereas the US is a large potential market, it’s not the one development avenue. The corporate has additionally recognized Spain, India, and Austria as potential alternatives for 2025.

Dividends

With a number of worldwide enlargement prospects in progress, it’s pure to assume Tristel isn’t more likely to be returning money to shareholders any time quickly. However that may be an enormous mistake. The corporate at the moment distributes slightly below 14p per share in dividends – a yield of 4% at in the present day’s costs. And it’s dedicated to growing this by 5% a yr going ahead. 

Given the uncertainty round its worldwide enlargement, that may appear considerably cavalier. If its plans go as hoped, Tristel should make investments money to assist its development. 

The corporate nevertheless, has no debt and the money on its stability sheet‘s rising. And its newest 8% improve in its interim dividend is in keeping with the expansion from the underlying enterprise.

Dangers and rewards

During the last 5 years, Tristel’s share price has been in all places as pandemic-driven demand gave option to unusually excessive stock ranges. However that volatility must be previously.

With the inventory at a 52-week low, I believe traders ought to take into account it. Enlargement into the US brings quite a lot of uncertainty, however the share price presents good worth for the dangers concerned.

If issues go effectively, a £10,000 funding in Tristel in the present day may be producing important passive earnings 10 years from now. And the inventory may very well be price much more as effectively.