Consumer spending drives most of the U.S. economy, but industrial companies are the foundation of modern life in the United States. Thanks to the work of certain industrial companies, people are, in general, safer, healthier, and enjoy more basic luxuries than decades ago.
These companies enjoy enormous market opportunities, leadership in their fields, and strong financials that create sustained earnings growth, dividends, and investment returns.
Investing doesn't always need to be complicated. Sometimes, what's worked in the past will likely continue working. Here are three industrial dividend-paying companies investors can confidently buy and hold for at least the next decade.
1. Lockheed Martin
Defense contractor Lockheed Martin (LMT 1.05%) is critical in protecting the United States and its allies. The company sells air, land, sea craft, weapons systems, and technology to the U.S. military. War is terrible, but the unfortunate reality is that America's role as a world power tends to draw the country into various geopolitical conflicts. Currently, the United States is supporting Ukraine and Israel in their respective conflicts in Europe and the Middle East. The U.S. defense budget ebbs and flows, but generally heads higher over time and is poised to continue rising.
Lockheed Martin has benefited from that spending, generating steady growth that has fueled 22 consecutive years of dividend growth and market-beating total returns over the past decade. Lockheed Martin's dividend payout ratio is only 47% of its estimated 2024 earnings. Plus, the dividend offers a solid 2.1% starting yield.
Lockheed Martin produces the F-35 Lightning II, the world's most expensive weapons program. That program should help drive long-term growth, leading to higher earnings and dividends for the next decade.
2. Emerson Electric
Companies must evolve to continue growing as the world changes. Emerson Electric (EMR -0.32%) has enjoyed decades of success as a prominent industrial conglomerate. The stock is a Dividend King because the company has paid and raised its dividend for 67 consecutive years. Yet, the company hasn't rested on its laurels. Over the past few years, Emerson has restructured itself, shedding undesirable businesses and acquiring new ones to position itself for long-term growth in renewable energy, factory automation, and industrial software.
Emerson should continue raising its dividend for years. Its dividend payout ratio is just 38% of estimated 2024 earnings and yields 1.9% at the current share price. Emerson's management team targets double-digit annualized earnings growth through economic ups and downs, which could mean hefty raises that don't move the payout ratio much. With healthy growth on the horizon, now might be the best time in years for dividend investors to check out Emerson.
3. Badger Meter
Water is a basic necessity, but it isn't easy to filter, treat, and transport it to everyone. Even in the United States, the water systems need more investment. The American Society of Civil Engineers 2021 Infrastructure Report Card graded U.S. water infrastructure at a C-, and it's far worse in many places worldwide. Badger Meter (BMI 1.27%) sells products that help control and monitor water flow and quality, and has enjoyed years of strong growth. The stock has been an absolute rock star, outperforming the S&P 500 index by roughly 10-to-1 over the past few decades.
The company's success has enabled management to shower investors with dividends. Badger Meter has raised its dividend for 32 consecutive years, with an average increase of 11% over the most recent decade. There is plenty of room for future growth, too. The dividend will only take up 33% of Badger Meter's estimated 2024 earnings, and analysts believe the company's earnings will grow by an average of 18% annually over the next three to five years. The yield is only 0.6% today, but a decade of double-digit dividend growth adds up.
Those looking for rapid dividend growth and potential market-beating returns should check out this under-followed water stock.
