Rollins: The Bedrock Dividend Stock Down 8% to Buy on the Dip and Hold Forever

Rollins (ROL), the leading pest-control company, has seen its stock price dip by around 8% recently. Despite this temporary setback, investors should consider this as an opportunity to buy into a bedrock dividend stock that offers resilience, growth, and income stability. This article explores why Rollins is an attractive long-term investment, focusing on its non-discretionary offerings, acquisitive nature, dividend growth, and industry leadership.


Rollins' non-discretionary offerings contribute to its resilience and steady growth. With an 80% recurring sales rate, the company is less susceptible to economic fluctuations. Its pest and wildlife control services ensure a steady demand, as evidenced by its consistent sales growth of 6% to 12% during challenging periods like the Great Recession, industrial slowdown, and COVID-19 pandemic. This resilience is reflected in Rollins' five-year beta of 0.7, indicating its stability compared to the broader market.


Rollins' acquisitive nature and market consolidation strategy significantly enhance its long-term growth prospects. With a highly fragmented pest control industry, Rollins has a lengthy runway for continued M&A. Its mastery in generating ever-increasing cash flows post-acquisitions, as evidenced by its 34% average cash return on invested capital (ROIC) over the last decade, positions it as one of the best compounders on the market. Despite using less than half of its free cash flow on acquisitions, Rollins maintains a soaring, well-funded dividend, making it an attractive long-term hold.

Rollins' dividend growth and payout ratio are key factors contributing to its long-term appeal. The company has quadrupled its quarterly dividend since 2014, with a 10% increase announced for the upcoming quarter. Despite this rapid growth, Rollins uses only 54% of its free cash flow (FCF) to fund its dividend, indicating sustainability. For investors who bought and held shares a decade ago, their original cost basis now yields 7%, demonstrating the power of dividend growth investing. This consistent, well-funded dividend growth, coupled with a manageable payout ratio, makes Rollins an attractive choice for long-term investors seeking stable income and potential capital appreciation.


Rollins' industry leadership and brand strength are significant contributors to its ability to maintain market share and pricing power. As the market share leader in the $20 billion pest control industry, Rollins serves over 2 million customers in 70 countries, with 80% of sales being recurring. This stability is reflected in its five-year beta of 0.7, indicating lower volatility compared to the broader market. Additionally, Rollins' well-known Orkin brand, recognized by 92% of U.S. respondents in a 2022 brand awareness study, provides a wide business moat, allowing it to charge incrementally higher prices while maintaining customer loyalty. This combination of industry dominance, recurring revenue, and strong branding enables Rollins to consistently generate healthy returns on invested capital and fund its well-funded, rapidly growing dividend.

In conclusion, Rollins is an attractive bedrock dividend stock that offers resilience, growth, and income stability. Its non-discretionary offerings, acquisitive nature, dividend growth, and industry leadership make it an ideal long-term investment for income-focused investors. With its recent dip, now is an opportune time to buy Rollins and hold it forever.