Many of these companies are often referred to as members of the “smokestack industry” and are classified as cyclical stocks. A cyclical stock is one that rises and falls in step with the economy.
Timing is important when buying an industrial stock. If you buy when business is booming you will likely pay too much, which means a very low yield. Most stocks in this sector are currently overpriced. The average yield on the Industrial Sector stocks that I follow is only 2.0%, with just 5 stocks yielding over 3%.
The Industrials Sector is one of the largest sectors in my dividend growth database. Of the 231 stocks that I track, it currently is represented by 40 stocks (17%). As noted above, this is not a sector I am in a position to buy often, but when the time is right, I plan on taking full advantage of the opportunity.
This week week, I screened my dividend growth stocks database for Industrials with a yield at or above 2.4% and have increased their dividends for at least 9 consecutive years. The results are presented below:
Stanley Black & Decker Inc. (SWK) is a diversified global provider of hand tools, power tools and related accessories and systems the resulted from the March 2010 merger of StanleyWorks and Black & Decker. The company has paid a cash dividend to shareholders every year since 1877 and has increased its dividend payments for 46 consecutive years. Yield: 2.5%
Norfolk Southern Corp. (NSC) operates 20,000 route miles serving 22 eastern states, the District of Columbia, and Ontario, Canada. The company has paid a cash dividend to shareholders every year since 1901 and has increased its dividend payments for 12 consecutive years. Yield: 2.5%
Emerson Electric Co. (EMR) designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 57 consecutive years. Yield: 2.8%
General Dynamics (GD) is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets. The company has paid a cash dividend to shareholders every year since 1979 and has increased its dividend payments for 22 consecutive years. Yield: 3.0%
McGrath RentCorp (MGRC) rents and sells modular buildings, electronic test and measurement equipment, and liquid and solid containment tanks and boxes. The company has paid a cash dividend to shareholders every year since 1990 and has increased its dividend payments for 21 consecutive years. Yield: 3.1%
Waste Management Inc. (WM) is the largest U.S. trash hauling/disposal concern. The company has paid a cash dividend to shareholders every year since 1998 and has increased its dividend payments for 9 consecutive years. Yield: 3.5%
Raytheon Company (RTN), the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems. The company has paid a cash dividend to shareholders every year since 1964 and has increased its dividend payments for 9 consecutive years. Yield: 3.4%
Lockheed Martin Corp. (LMT), the world's largest military weapons manufacturer, is also a significant supplier to NASA and other non-defense government agencies. LMT receives about 93% of its revenues from global defense sales. The company has paid a cash dividend to shareholders every year since 1995 and has increased its dividend payments for 11 consecutive years. Yield: 4.5%
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 230+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long NSC, EMR, GD, RTN, LMT. See a list of all my dividend growth holdings here.
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(Photo: Steve Woods)
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