5 Industrial Titans To Buy Instead Of Bonds

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Includes: APD, ETN, ITW, MMM, UTX
by: Sameer Advani

With the 30-year treasury at 2.54%, the patient and diligent investor is presented with a fantastic opportunity to own high-quality American industrial titans at a good price and enjoy a dividend yield higher than the 30-year treasury yield. The following five industrial titans have strong records of returning capital to shareholders:

Criteria for Selection

1. Market cap greater than $10 billion.

2. Earnings per share growth rate greater than 10% per year.

3. Revenue growth rate greater than 5% per year.

4. Dividend growth rate greater than 5% per year.

5. Dividend payout ratio less than 50%.

Five Industrial Titans to Buy
Market Cap TTM PE Div Yield Payout Ratio 10 Yr EPS Growth 10 Yr Revenue Growth 10 Yr Dividend Growth Years Div Paid
ETN 14.57B 10.33 3.52 0.36 20.72 8.2 11.9 25
UTX 66.47B 12.41 2.93 0.38 11.11 7.63 15.3 19
ITW 25.57B 13.46 2.69 0.36 12.03 6.71 12.9 48
APD 16.89B 14.46 3.2 0.46 10.16 5.58 11.1 30
MMM 62.86B 14.95 2.61 0.46 12.79 6.31 6.2 54
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Eaton Corp. (NYSE:ETN) is a global power management company. Eaton generated revenues of $16.1 billion and net income of $1.35 billion in 2011. With a net profit margin of 8.4%, a return on equity of 18%, and debt to equity of 55%, Eaton is a BUY.

United Technologies (NYSE:UTX) provides technology for the building and aerospace industries worldwide. United Technologies generated revenues of $58.2 billion and net income of $5.4 billion in 2011. With a net profit margin of 14%, a return on equity of 23%, and a debt to equity of 92%, United Technologies is a BUY.

Illinois Tool Works (NYSE:ITW) is a multinational manufacturer of industrial products and equipment. The company generated revenues of $17.8 billion and net income of $2 billion in 2011. With a net profit margin of 11.3%, a return on equity of 20.6%, and debt to equity of 48.7%, Illinois Tool Works is a BUY.

Air Products and Chemicals (NYSE:APD) supplies industrial gases and chemicals. The company generated revenues of $10.1 billion and net income of $1.25 billion in 2011. With a net profit margin of 12.4%, a return on equity of 21.4%, and a debt to equity of 64.7%, Air Products is a BUY.

3M (NYSE:MMM) is a global industrial conglomerate. 3M generated revenues of $29.6 billion and net income of $4.4 billion in 2011. With a net profit margin of 14.7%, a return on equity of 27.6%, and a debt to equity of 36.4%, 3M is a BUY.

Disclosure: I am long UTX, ETN.