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. Many stocks in this sector are currently overpriced. The average yield on the Industrial Sector stocks that I follow is only 2.0%.
The Industrials Sector is one of the largest sectors in my dividend growth database. Of the 260 stocks that I track, it currently is represented by 53 stocks (20%). 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 above 2.7% and have increased their dividends for at least 10 consecutive years. The results are presented below:
3M Co. (MMM) provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives and other chemical additives. The company has paid a cash dividend to shareholders every year since 1916 and has increased its dividend payments for 60 consecutive years. Yield: 2.71%
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 62 consecutive years. Yield: 2.8%
Archer-Daniels-Midland Co. (ADM) is one of the world's leading agribusiness concerns, with major market positions in agricultural processing and merchandising. The company has paid a cash dividend to shareholders every year since 1927 and has increased its dividend payments for 43 consecutive years. Yield: 2.9%
Cummins Inc. (CMI) is a leading manufacturer of truck engines also makes stand-by power equipment and industrial filters. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 14 consecutive years. Yield: 3.4%
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 200+ 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 MMM, EMR, ADM, CMI. See a list of all my Dividend Growth Portfolio holdings here.
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(Photo: Steve Woods)
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