Assuming quality stock selection, growth investing has the potential to make investors quite wealthy over time. Investors needn't look any further than the healthcare giant Thermo Fisher Scientific (TMO -0.38%): A $5,000 investment in the stock made only five years ago would now be worth $11,890 with dividends reinvested. For perspective, that is significantly more than the $8,645 that the same investment in the S&P 500 index would be valued at today with dividends reinvested.

If an investment can more than double in a five-year period, imagine what's possible over 20- or 30-plus years. Keeping in mind that past performance is no guarantee of future growth, is Thermo stock a buy for growth investors in the years ahead? Let's examine the company under the proverbial microscope to render a judgment.

The pain is only temporary

Pharmaceutical companies are trying to tackle some of the most challenging diseases of our time. And without the likes of Thermo Fisher Scientific, the progress that is being made wouldn't be possible. That is because the company's lab equipment -- such as gene analyzer devices and centrifuges -- are vital to the groundbreaking research that is being conducted by pharma companies.

Thermo's revenue dipped 2.6% year over year to $10.7 billion during the second quarter ended July 1. But these results aren't as discouraging as they may initially seem. The company's top-line shrinkage was entirely the result of a plunge in COVID-19 test revenue to $80 million as demand for testing fell off a cliff in recent months. Factoring this out of Thermo's revenue, core organic revenue grew by 2% for the quarter. This isn't a bad result when considering that the macroeconomic environment led some of the company's customers to become more careful with their spending.

Thermo's non-GAAP (adjusted) diluted earnings per share (EPS) decreased by 6.5% over the year-ago period to $5.15 in the second quarter. The company's costs slightly rose during the quarter, which led to a 110-basis point contraction in non-GAAP net margin to 18.7%. Thermo's reduced profitability could only be somewhat countered by a lower share count due to share repurchases. This is why the company's adjusted diluted EPS fell more than revenue for the quarter.

As COVID-19 testing revenue becomes less of an influence on Thermo's results by the quarter, and the macroeconomic environment eventually improves, so will the company's growth prospects. That explains why analysts believe Thermo's adjusted diluted EPS will compound by 7.1% annually, which could prove to be a lowball estimate as time progresses.

Scientists working in a laboratory.

Image source: Getty Images.

A dividend with massive growth ahead

Thermo's 0.3% dividend yield is quite modest compared to the S&P 500 index's 1.5% yield. While the dividend has more than doubled in the last five years, the primary reason for its low yield is that the share price is growing just as fast. That's certainly a good problem for long-term shareholders to have.

TMO Dividend Chart

TMO Dividend data by YCharts

Thermo's dividend payout ratio is set to be just 6% in 2023. With its steady earnings growth forecast, the company can be especially generous with boosts to the payout in the years to come.

Thermo Fisher stock is a blue-chip buy

With its shares only marginally positive so far in 2023, Thermo stock has largely missed out on the rally of the broader market. This has helped to keep the forward price-to-earnings (P/E) ratio in check at just 22, which is below the diagnostics & research industry average forward P/E ratio of 24.6. I think such a discount for an industry-leading company makes Thermo a no-brainer buy for growth investors at the current $553 share price.