4 Dividend Paying Industrials With Strong Sources Of Profitability

Includes: AOS, EMR, GE, SPXC, XLI
by: Kapitall

To create the list below we started with a universe of stocks in the industrials sector with a dividend of at least 1%, but not more than 5%. This allowed us to focus on companies with a sustainable yield.

We further analyzed our list for strong profitability by performing DuPont analysis. DuPont analyzes profitability by breaking up return on equity (net income/equity) into three components. If the ROE is unsatisfactory, the DuPont analysis helps target the part of the business that is underperforming. Learn more about the equation here.

Those companies that pass DuPont are seeing positive trends in the sources of their increasing profitability, which adds further weight to the idea that the names are profitable and that it will continue to make dividend payouts.

The List

Our final list consisted of 4 companies.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Do you think these dividend stocks are attractive? We also encourage investors to take a look at the Industrial Select Sector SPDR Fund (NYSEARCA:XLI), which has a dividend yield of 2.1%, and is up 9% year-to-date, up 14% in the past 1-year and up 4% in the past 5 years.

Use this as a starting point for your analysis.

1. AO Smith Corp. (NYSE:AOS): Engages in the manufacture and sale of water heating equipment to the residential and commercial markets in the United States and internationally.

  • Market cap at $3.56B, most recent closing price at $74.66.
  • MRQ net profit margin at 7.48% vs. 6.75% y/y. MRQ sales/assets at 0.231 vs. 0.203 y/y. MRQ assets/equity at 1.897 vs. 2.163 y/y.
  • Dividend yield at 1.1%.

2. Emerson Electric Co. (NYSE:EMR): Operates as a diversified manufacturing and technology company.

  • Market cap at $39.92B, most recent closing price at $55.28.
  • MRQ net profit margin at 8.18% vs. 6.99% y/y. MRQ sales/assets at 0.234 vs. 0.226 y/y. MRQ assets/equity at 2.269 vs. 2.301 y/y.
  • Dividend yield at 3%.

3. General Electric Company (NYSE:GE): Operates as a technology, service, and finance company worldwide.

  • Market cap at $227.75B, most recent closing price at $21.96.
  • MRQ net profit margin at 10.07% vs. 8.65% y/y. MRQ sales/assets at 0.052 vs. 0.05 y/y. MRQ assets/equity at 5.422 vs. 5.904 y/y.
  • Dividend yield at 3.5%.

4. SPX Corporation (SPW): Provides flow technology products, test and measurement products, thermal equipment and services, and industrial products and services worldwide.

  • Market cap at $3.48B, most recent closing price at $73.70.
  • MRQ net profit margin at 9.79% vs. 4.95% y/y. MRQ sales/assets at 0.201 vs. 0.171 y/y. MRQ assets/equity at 3.143 vs. 3.319 y/y.
  • Dividend yield at 1.4%.

*Profitability data sourced from Finviz, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Rebecca Lipman, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.