I previously concluded a series of articles that identified what I consider to be the best long-term income stocks (based on dividend growth and yield) for investors by comparing S&P 500 stocks within the same industry sector. In this series of articles, I will be following the same process for small-cap stocks within the S&P 600.
For Part 13, I will be taking a look at Diversified Industrial stocks within the Industrials sector. These stocks include:
- Actuant (NYSE:ATU)
- Barnes Group (NYSE:B)
- Briggs & Stratton (NYSE:BGG)
- Circor International (NYSE:CIR)
- Curtiss-Wright (NYSE:CW)
- Enpro Industries (NYSE:NPO)
- Franklin Electric (NASDAQ:FELE)
- Hillenbrand (NYSE:HI)
- John Bean Technologies (NYSE:JBT)
- Powell Industries (NASDAQ:POWL)
- Standex International (NYSE:SXI)
- Watts Water Technologies (NYSE:WTS)
Out of these stocks, Enpro Industries is the only one that does not currently pay a dividend.
When ranking the remaining stocks by dividend yield, the order is as follows:
- Briggs & Stratton - 2.49%
- Hillenbrand - 2.45%
- Powell Industries - 2.13%
- Barnes Group - 1.32%
- John Bean Technologies - 1.11%
- Franklin Electric - 1.00%
- Watts Water Technologies - 0.96%
- Curtiss-Wright - 0.76%
- Standex International - 0.63%
- Circor International - 0.24%
- Actuant - 0.15%
When ranking the remaining two stocks by dividend growth over the past five years, the order is as follows:
- Standex International - 140.00%
- Curtiss-Wright - 62.50%
- Barnes Group - 50.00%
- Franklin Electric - 44.00%
- Watts Water Technologies - 36.36%
- John Bean Technologies - 28.57%
- Briggs & Stratton - 13.64%
- Hillenbrand - 6.67%
- Powell Industries - 4.00%
- Actuant - 0.00%
- Circor International - 0.00%
Because Actuant and Circor International have shown zero growth over the past five years, I am removing them from consideration as dividend growth stocks. I am also removing Powell Industries as the company has only been paying dividends for five quarters. Even though John Bean International has been paying dividends for a full years, they have only had 1 increase during that time, so I am going to remove this stock from future review as well.
Even though Briggs & Stratton and Hillenbrand have the two highest yields out of this group, their dividend growth has been disappointing. Going back ten years, Hillenbrand has averaged less than 1% yearly increases in its dividend, while Briggs & Stratton's dividend has actually decreased during this time. Because of this I'm not including these two stocks as potential candidates either.
Looking at revenue growth over the past five years for the remaining five stocks, you can see that Franklin Resources has seen the highest growth during this time, while Barnes Group has seen the lowest.
B Revenue (TTM) data by YCharts
In terms of earnings, Standex International has seen the highest growth, while Curtiss-Wright has seen the lowest during the past five years.
B EPS Basic (TTM) data by YCharts
In terms of trailing PE ratios, Watts Water Technologies is the one stock that appears significantly overvalued, while Barnes Group appears slightly undervalued compared to the other stocks within this group.
B PE Ratio (TTM) data by YCharts
Return on Assets and Equity
- Standex International - 8.61%
- Franklin Electric - 7.28%
- Barnes Group - 5.46%
- Curtiss-Wright - 4.19%
- Watts Water Technologies - 3.87%
- Standex International - 14.81%
- Franklin Electric - 13.10%
- Barnes Group - 10.09%
- Curtiss-Wright - 9.18%
- Watts Water Technologies - 6.66%
In its latest quarter, the company reported an 18% increase in revenue and an increase of 64% in adjusted net earnings per share compared to the same period last year. Positive results were seen in both the company's industrial and aerospace divisions. The company expects its full year earnings to be up 26%-28% compared to last year with strong expectations for 2015 as well.
In its latest quarter, the company reported a 9% increase in revenue and a 17% increase in net earnings per share. In addition to better margins, the company also saw its backlog grow by 9% in the quarter. The company recently authorized a $300 million share repurchase program to begin in 2015, which along with the company's growing dividend should continue to bring added returns to long term investors.
In its latest quarter, the company posted a 11% increase in revenue and adjusted earnings per share that matched the same period last year. The company saw challenges in its Water business, but strong results in its Fueling Systems business. Franklin Electric announced two acquisitions within the quarter, which will expand its market reach further in India.
In its latest quarter, the company posted a 13% increase in revenue and an increase in earnings per share from $0.97 last year to $1.16 per share. Three of the company's five business segments displayed double digit growth in the quarter. The company had this to say about its forecast for 2015:
Fiscal 2015 is expected to be a strong year for Standex. We delivered double-digit, top-line growth in the first quarter, while continuing to improve the company's overall operating performance. Incoming orders are strong, and backlogs are up from a year ago in all businesses. Conditions in the majority of our end markets remain favorable, and we are making good progress on strategic growth initiatives in each of our businesses. Our recent acquisitions are performing well, and our balance sheet provides us with the flexibility to pursue opportunities for driving organic and acquisition-driven growth and delivering greater shareholder value.
Watts Water Technologies
In its latest quarter, the company reported a 1% increase in revenue and an increase in earnings per share from $0.49 last year to $0.64. While the company saw impressive growth in its Asia-Pacific market, it saw sales declines in Europe, Middle East and Africa. Last month, the company announced an agreement to acquire AERCO International. Another SA author has written about some of the highlights/risks associated with this acquisition and you can find that article here.
Out of this group of stocks, Standex International is the stock I like the best as a long term dividend growth investment. Although the stock offers a low yield, it has seen the highest dividend growth over the past five years. The company also has the lowest payout ratio out of the five main stocks reviewed, along with the highest earnings growth and best returns on assets and equity.
I believe that the company's strong backlog and healthy balance sheet will allow the company to continue rewarding shareholders through significant dividend growth. With new acquisitions (Enginetics, Ultrafryer) and investments that will lead to improved margins (automated manufacturing improvements, new/updated distribution centers, etc.), I believe that Standex International will continue to perform well compared to its peers as it has over the past ten years.
B data by YCharts
As always, I suggest individual investors perform their own research before making any investment decisions.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.