1. Cintas Corporation (NASDAQ:CTAS)
5-Year Average Annual Dividend Growth Rate: 22.3%
Cintas Corporation (NASDAQ:CTAS) is an Ohio-based company that provides a range of products and services primarily focused on workplace essentials, including uniform rental and facility services. The company operates across numerous industries, providing diversification and access to an almost unlimited market potential. The stock has delivered significant returns to investors, with its share price increasing by nearly 240% over the past five years, far outpacing the broader market’s 91% gain during the same period.
Cintas Corporation (NASDAQ:CTAS) reported solid earnings in fiscal Q1 2025. The company’s revenue for the quarter came in at $2.5 billion, up 7% from the same period last year. The company has revised its full-year financial guidance upward. Annual revenue projections have been adjusted from the previous range of $10.16 billion to $10.31 billion to a new range of $10.22 billion to $10.32 billion. Similarly, diluted EPS guidance has been raised from $4.06 to $4.19 to a new range of $4.17 to $4.25.
Cintas Corporation (NASDAQ:CTAS)’s cash position is contributing to its dividend policy. In the most recent quarter, the company reported an operating cash flow of $466.7 million, which grew from $337 million in the same period last year. ClearBridge Investments mentioned CTAS in its Q4 2023 investor letter. Here is what the firm has to say:
“The recent market upswing enabled us to harvest profits from some of our larger cap holdings and put the proceeds to work across four newer positions. We added significantly to Cintas Corporation (NASDAQ:CTAS), a position initiated late in the third quarter. Cintas maintains a leading position in a fragmented, $40 billion market for uniform rental and facilities services. The company’s scale gives it better purchasing power, route density and technology, which have historically led to better price and service levels. Its position also enables industry-leading retention rates and sustainably higher returns on invested capital. Finally, Cintas has demonstrated a strong track record of improving margins. This addition not only supports our efforts to increase the aggregate quality and growth of the portfolio, but also acts to further diversify our industry exposures.”
Cintas Corporation (NASDAQ:CTAS) currently offers a quarterly dividend of $1.56 per share. The company has been rewarding shareholders with growing dividends for the past 41 consecutive years. With a 5-year average annual dividend growth rate of 22.3%, CTAS is one of the best dividend aristocrat stocks on our list. The stock’s dividend yield on November 14 came in at 0.72%.
While we acknowledge the potential of Cintas Corporation (NASDAQ:CTAS), our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CTAS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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