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Dividend Champion Spotlight: Dover Corp.

Dec. 05, 2018 3:05 PM ETDover Corporation (DOV)11 Comments
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  • Dover Corp. is a long time dividend champion of 63 years. The company is an industrial conglomerate that just spun off its oil & gas businesses.
  • The company is in the process of recalibrating its operations post spin-off. The business will be more consistent, but profitability needs to improve.
  • Dover Corp. has a new CEO, and is focusing to improve efficiency and strengthen its portfolio.
  • Shares are expensive compared to historical norms, and the question marks due to unestablished performance post spin-off make Dover a risky investment at this time.
  • This article is part of a series that will put a spotlight on "Dividend Champions" and the fundamentals behind their success.

Industrials are a common sight on the dividend champions list. An ever growing population requires constant advances in technology and efficiency, offering continual opportunity for the companies that drive industrial production in our world. Today's dividend champion spotlight features a long time champion in Dover Corp. (NYSE:DOV), whose dividend growth streak currently stands at 63 years. Despite a long history, the company is currently in transition after spinning off its volatile oil and gas business into what currently trades as Apergy (APY). We dive into Dover to identify the current state of the business, and where management hopes to take the company in the coming years.

Dover Corp. was founded in 1947, and is headquartered in Downers Grove, IL. The company is an industrial conglomerate that designs and manufactures components, equipment, and specialty systems for a variety of industrial markets and applications. The business operates in three primary segments: Fluids, Engineered Systems, and Refrigeration & Food Equipment. The company generates approximately $7 billion in annual revenues.Source: Dover Corp.

As we dive into our analysis, it's important to put emphasis on the past two quarters. In May, the company completed its spin off of Apergy, the company's oil and gas business. This removed what was a more volatile business segment from the company. When oil & gas commodity prices fluctuated, it would in turn swing the financials of the overall company. By spinning that business off, the operating performance of the company will be more consistent moving forward. While the spin-off saw Dover send off a volatile (but at times very lucrative) business segment, Dover did receive $700 million as part of the deal, and will set out to enhance the remaining product portfolio.

Financial Performance

Source: Ycharts

The company has been very cyclical, with extreme revenue and earnings gyrations over the

This article was written by

Wealth Insights profile picture
I provide straight forward insights on stocks and markets using fundamental analysis and common sense. - Bachelor's degree in Business Administration with a concentration in Financial Analysis. Been investing and following the markets for more than a decade.- Wealth Insights is an investor, and investment author. His content is not geared to anyone's specific investment goals, time horizons, or risk tolerance. Content is for illustrative purposes only, and is not intended to displace advice from a fee based financial adviser. It is not to be taken as investment advice, or influence investor decision making. Accuracy of data is not guaranteed.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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