3 Under-the-Radar Industrial Stocks That Deserve a Place in Your Dividend Portfolio

NYSE: DCI | Donaldson Company, Inc.  News, Ratings, and Charts

DCI – The industrial sector is the backbone of growth for any economy and is predicted to expand in 2022. With market uncertainties like high inflation, rising interest rates, and supply chain constraints, it could be wise to bet on under-the-radar, dividend-yielding industrial stocks Donaldson (DCI), Crane (CR), and Curtiss-Wright (CW) to ensure a steady income stream.

The stock market is expected to experience some volatility in 2022, keeping in mind high inflation, rising interest rates, and intensified supply chain disruptions amid growing Omicron-related concerns. George Lagarias, the chief economist at Mazars, stated, “We believe that for 2022, investors should at the very least be prepared for more volatility.” Thus, investors looking for a steady flow of income should rely on safer bets, like dividend-paying industrial stocks, as the industrial sector is poised to grow manifold in the near term.

According to Brian Gilmartin, the industrial sector, currently about 7% – 8% of the S&P 500’s entire market cap, is projected to lead the 11 S&P 500 sectors in terms of EPS growth in fiscal 2022. Moreover, Federal policies like the infrastructure and defense bill could stimulate the industrial sector. Experts like CFP Barry Glassman, founder, and president of Glassman Wealth Services, believe so, and he has claimed that “his firm is focusing on total shareholder return — that is, looking at stocks with consistent dividend payouts, as well as stock buybacks.”

Therefore, dividend-yielding under-the-radar industrial stocks Donaldson Company, Inc. (DCI), Crane Co. (CR), and Curtiss-Wright Corporation (CW) could be solid picks now.

Donaldson Company, Inc. (DCI)

DCI manufactures and sells filtration systems and replacement parts worldwide. The company operates through two segments, Engine Products and Industrial Products. It is a global leader in technology-led filtration products and solutions.

On November 23, 2021, DCI announced that it acquired Solaris Biotechnology Srl. Tod Carpenter, chairman, president & CEO of DCI, said, “We are excited about Solaris’ capabilities and growth trajectory, and this acquisition is an important step on our journey towards strengthening our presence in the life sciences market.”

DCI has paid a cash dividend every quarter for 66 years. Over the last three years, DCI’s dividend payout has grown at a 5.07% CAGR. While DCI’s four-year average dividend yield is 1.55%, its current dividend translates to a 1.48% yield. On November 19, 2021, DCI announced that its Board of Directors declared a regular cash dividend of 22 cents per share, payable December 22, 2021.

DCI’s net sales increased 19.5% year-over-year to $760.90 million in the fiscal 2022 first quarter ended October 31, 2021. Its net earnings came in at $77.10 million, up 24.6% year-over-year, and its EPS increased 27.1% year-over-year to $0.61.

Analysts expect DCI’s revenue to increase 10.3% year-over-year to $3.15 billion in fiscal 2022. Also, its EPS is expected to grow at 15.1% to $2.67 in fiscal 2022. In addition, it surpassed Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 6.1% to close Friday’s trading session at $59.26.

DCI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

DCI has a B grade for Value, Quality, Sentiment, and Stability. Within the B-Rated Industrial – Machinery industry, it is ranked #3 out of 77 stocks. Click here to see the additional POWR Rating for Growth and Momentum for DCI.

Crane Co. (CR)

CR manufactures and sells engineered industrial products in several countries across the globe. Its segments are Fluid Handling; Payment & Merchandising Technologies; Aerospace & Electronics; and Engineered Materials.

On October 25, 2021, Max Mitchell, CR’s President and CEO, said, “We delivered robust results in the third quarter with record EPS. Performance was outstanding across all of our businesses, and we were able to achieve 20% core year-over-year sales growth and high-teens adjusted operating margins even in the face of continued inflationary pressures and ongoing supply chain challenges.”

CR’s dividend payout has grown at a CAGR of 7.10% in the last three years. Its current dividend yield is 1.69%, and its four-year average yield is 1.99%. On October 25, 2021, CR announced its regular quarterly dividend of $0.43 per share for the fourth quarter of 2021. 

CR’s total net sales increased 21.4% year-over-year to $833.50 million in the third quarter ended September 30, 2021. Its total operating profit came in at $138.20 million, representing an 82.1% year-over-year rise. Its net income increased 106% year-over-year to $116.60 million, while its EPS increased 102.1% year-over-year to $1.96.

Analysts expect CR’s revenue and EPS to grow 7.1% and 67.4% year-over-year to $3.16 billion and $6.43, respectively, in fiscal 2021. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 31% to close Friday’s trading session at $101.73.

CR’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system. In addition, it has a grade B for Growth, Value, Stability, Sentiment, and Quality. It is ranked #2 in the same industry. Click here to see the additional POWR Ratings for CR (Momentum).

Curtiss-Wright Corporation (CW)

CW designs, manufactures, and overhauls precision components and engineered products and services primarily to the aerospace, defense, general industrial, and power generation markets worldwide. It has three segments: Commercial/Industrial, Defense, and Power. 

On November 3, 2021, Lynn M. Bamford, President and CEO of CW, said, “Looking ahead to the remainder of 2021, while global supply chain disruption continues to impact many businesses, we will continue to work aggressively to mitigate any negative effects on Curtiss-Wright, leveraging the strength and resilience of our combined portfolio, which has provided us with confidence to raise the midpoint of our Adjusted diluted EPS guidance range.”

CW’s dividend payout has grown at a 5.77% CAGR over the last three years and at a CAGR of 6.43% in the past five years. While CW’s four-year average dividend yield is 0.55%, its current dividend translates to a 0.52% yield. On November 18, 2021, CW declared a quarterly dividend of $0.18 a share, unchanged from its previous quarter.

CW’s total net sales increased 8.6% year-over-year to $620.62 million for the fiscal 2021 third quarter ended September 30, 2021. The company’s adjusted sales increased 11.6% to $613.8 million, and its adjusted operating income came in at $107.5 million, up 12.2% year-over-year. Its EPS came in at $1.70, up 9.7% year-over-year.

For fiscal 2021, analysts expect CW’s revenue to be $2.50 billion, representing a 4.6% year-over-year rise. In addition, the company’s EPS is expected to increase 10.7% year-over-year to $8.06 in fiscal 2022. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 19.2% to close Friday’s trading session at $138.67.

CW’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Sentiment, Quality, and Stability. Click here to see CW’s rating for Value and Momentum as well. CW is ranked #6 in the same industry.

DCI shares were trading at $58.65 per share on Monday afternoon, down $0.61 (-1.03%). Year-to-date, DCI has gained 6.45%, versus a 29.28% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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