With all of the ups and downs starting to emerge in U.S. economic data lately, investors are gravitating towards businesses that can weather the storm and keep delivering the goods, no matter what. And that's where Ecolab Inc. (ECL) shines - their area of expertise is providing essential cleaning, water treatment, and infection prevention solutions that are always in demand, whether times are good or bad.

The numbers speak for themselves. The global infection control market is expected to grow from $51 billion in 2024 to a whopping $69.2 billion by 2029. That is some serious growth, driven by the increasing need for top-notch sterilization and disinfection across various industries, especially healthcare.

Looking at the bottom line, analysts expect Ecolab's earnings per share (EPS) to jump by 25% this fiscal year, with double-digit growth expected next year, too. They've also been remarkably consistent with their dividends, increasing these shareholder payouts for over 30 years - establishing their status as an ultra-reliable Dividend Aristocrat. 

Here's a closer look at why Wall Street analysts consider this stock a top pick, and whether it's a good buy for dividend investors aiming to leverage the ongoing growth and resilience of the essential services sector.

Ecolab Stock: Priced for Growth

Ecolab Inc. (ECL) operates with a niche market business model, focusing on delivering specialized solutions to industries such as food service, healthcare, and oil and gas. This strategic focus has allowed Ecolab to create substantial value for its customers, which in turn drives earnings growth.

In the past year, Ecolab's stock has been a standout, even as investors have shown a significant preference for Big Tech stocks over passive income plays. ECL is up 35% over the past 52 weeks, and the stock has gained 17.7% on a YTD basis - outpacing the performance of the broader S&P 500 Index ($SPX) over both time frames.

With a market capitalization of approximately $65.04 billion and a forward P/E ratio of 34.81, ECL is priced at a premium to some of its peers in the materials sector. The said, the current multiple represents a slight discount to its historical average P/E of 37.9, and the same is true of Ecolab's PEG ratio of 2.5. 

In fact, if the company is valued at a premium to its materials sector peers, it's likely because Ecolab's multiples are reflecting significantly higher expectations for future earnings and revenue growth in comparison.

Plus, Ecolab's dedication to returning value to shareholders is evident through its dividend history. The company has increased its dividends for 32 consecutive years, showcasing remarkable financial health and stability. Over the past decade, ECL has grown its dividends at a CAGR of 8.1%, and the quarterly cash payment now stands at $0.57 per share.

With a current dividend yield of approximately 0.98% and a payout ratio of 38.5%, these dividends are well-covered by earnings, and Ecolab demonstrates a balanced approach to growth and shareholder returns. This makes ECL stock a compelling choice for those seeking both growth and income.

Ecolab Beats on Q1 Earnings

For the first quarter of 2024, Ecolab reported EPS of $1.34, which narrowly surpassed analysts' expectations. The company's revenue for the period was $3.75 billion, in line with estimates. Management attributed the Q1 beat to 5% organic sales growth and a 400 basis point expansion in organic operating income margin.

Cash flow from operating activities totaled $649 million during Q1, while free cash flow rose to $448 million from $423 million in the year-ago quarter.

Ecolab also hiked its EPS forecast for the full fiscal year, and now anticipates $6.40 to $6.70 for fiscal 2024, compared to its prior guidance of $6.10 to $6.50.

Ecolab's recent strategic initiatives could help drive sustainable growth. The inauguration of the wastewater treatment plant on Jurong Island is a prime example. This facility - located on the site of a sizable new M&A deal between Shell (SHEL) and Glencore (GLNCY) - is designed to handle variable bio-treater wastewater with advanced ultrafiltration and reverse osmosis processes, can treat up to 24,000 cubic meters of water per month.  

Additionally, Ecolab's achievement of sourcing 100% renewable electricity for its European operations marks a significant milestone. By utilizing the Mörknässkogen wind farm in Finland, Ecolab now powers all its European sites sustainably, contributing to an 80% global renewable electricity sourcing level. This commitment to renewable energy not only reduces operational costs over time, but also positions Ecolab as a forward-thinking investment in the eyes of environmentally conscious investors.

What Do Analysts Expect for ECL?

Analyst sentiment around Ecolab is overwhelmingly positive. Out of 23 analysts covering the stock, 7 recommend a “strong buy,” 2 suggest a “moderate buy,” and 14 advise a “hold,” for a consensus rating of “moderate buy.”

The mean price target is $242.06, implying expected upside of 3.6% from Thursday's close. The Street-high price target of $260 - shared by analysts at Barclays, Mizuho, RBC Capital, and Piper Sandler - is about 11.3% overhead.

Ecolab Makes a Compelling Investment Case

Wrapping up, Ecolab's performance in 2024 has been nothing short of impressive. With its strategic moves in sustainability, solid financials, and the backing of a confident analyst community, it's clear why growth-minded investors are keeping a keen eye on this Dividend Aristocrat. For those looking to add a mix of growth, resilience, and environmental stewardship to their portfolio, Ecolab seems to tick all the right boxes.