An old stock market adage that I tend to agree with is that when it comes to investing, boring is good. If you go through a list of the best-performing stocks of all time, you’ll find commonalities among many of the featured companies. More often than not, the companies that have richly rewarded shareholders for the longest have come from industries that are less than exciting.
That’s why the industrials sector contains so many great businesses that have enriched their shareholders over the past decades. Companies within the industrial sector certainly don’t have exciting businesses. They aren’t likely to be featured in the financial media as the next major growth story. At the same time, they provide necessary functions to our society. They manufacture and distribute real, tangible things that contribute heavily to the economy.
If you’re an investor who focuses on cold hard cash instead of flash-in-the-pan ideas, these boring old industrials may be just what you need to provide your portfolio with a dose of (highly profitable) reality.
Building a fortress of dividends, one brick at a time
Diversified global industrial manufacturer Dover Corp (NYSE:DOV) has an incredibly impressive track record. Last year, the company raised its dividend 11%, representing the 57th consecutive year of a dividend increase. That record is the fourth-longest streak of dividend increases of any publicly listed company according to Mergent.
Of course, no company can maintain this kind of streak without the supporting underlying fundamentals, which Dover Corp (NYSE:DOV) has. Dover Corp (NYSE:DOV)’s full year 2012 revenue and diluted earnings per share from continuing operations climbed 10% and 11%, respectively, versus the prior year.
Not to be outdone, diversified industrials Emerson Electric Co. (NYSE:EMR) and Illinois Tool Works Inc. (NYSE:ITW) have long dividend track records of their own.
Emerson Electric Co. (NYSE:EMR) last raised its dividend in the fall of 2012. Emerson Electric Co. (NYSE:EMR) has a fantastic track record of raising its dividend for 55 consecutive years. Its most recent dividend raise was a nearly 3% bump, to its current level of $1.64 per share, representing a 3% yield at recent prices.
Emerson Electric Co. (NYSE:EMR) epitomizes the slow-and-steady nature of highly profitable industrials that allow investors to simultaneously sleep well at night and build sustainable wealth over many years.
Emerson Electric Co. (NYSE:EMR) recently reported 3% underlying sales growth over the first half of the fiscal year, along with 12% growth in diluted EPS over the same period. For the full year, management expects modest underlying sales growth of 1.5% to 2.5%, and 3% to 6% earnings per share growth for the year.