In this article we discuss the 5 best industrial dividend stocks for 2021. If you want to read our detailed analysis of the best industrial dividend stocks to buy this year and some merits of dividend investing, go directly to 10 Best Industrial Dividend Stocks For 2021.
5. CSX Corporation (NASDAQ: CSX)
Dividend Yield: 2.14%
CSX is an American holding company, and together with its subsidiaries, is focused on rail-based transportation services and real estate. The company offers rail services, transportation of intermodal containers and trailers, as well as other transportation services including rail-to-truck transfers and bulk commodity operations. As a leading transportation company, CSX has the largest rail system in the eastern US. CSX operates approximately 19,500 route mile rail network, serving various population centers in 23 states east of the Mississippi River, the District of Columbia, and the Canadian provinces of Ontario and Quebec.
The company’s earnings have grown 13% annually for the past five years. As CSX has managed to grow earnings at a rapid pace, it has also reinvested bulk of the profits for business expansion. CSX is a Fortune 500 company.
The stock is up 80.38% over the last 12 months.
4. Automatic Data Processing, Inc. (NASDAQ: ADP)
Dividend Yield: 2.14%
Founded in 1949, ADP is a comprehensive global provider of cloud-based Human Capital Management solutions and Business Process Outsourcing (BPO) services, analytics and compliance expertise. Industry analyst firm Everest Group has mentioned ADP as a leader in its 2021 Multi-Process Human Resources Outsourcing PEAK Matrix Assessment for the 10th successive year.
ADP has beaten analysts’ revenue and earnings estimates in the recent quarters, which prompted a slew of earnings upgrade. The stock is up 60.10% over the last 12 months.
Polen Focus Growth in their Q4 Investor Letter said that Automatic Data Processing, Inc. (NASDAQ: ADP) was one of the top detractors for the fund during the fourth quarter of 2020. Here is what Polen Focus Growth has to say about Automatic Data Processing, Inc. in their investor letter:
“For ADP, we detail our decision to sell our position in the third quarter letter. The very high levels of unemployment in the U.S. and extremely low interest rates have negatively impacted the business in the short term. At the same time, increasing competitive intensity in the human capital management industry is creating headwinds.”
3. Lockheed Martin Corporation (NYSE: LMT)
Dividend Yield: 2.14%
Formed by the merger of Lockheed Corporation with Martin Marietta in 1995, the Maryland, USA-headquartered LMT is a global security and aerospace company that employs around 110,000 people worldwide. The company is primarily engaged in the research, design, development, manufacturing, integration and sustainment of advanced technology systems, products and services. LMT’s four main business segments include Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
LMT has exceeded earnings estimate consensus in the recent quarters and its profit. The trailing 12-month PE ratio of 13.62 versus the S&P 500 PE of 27.48 makes LMT more attractive on absolute basis. Additionally, its PE compares favorably with the Zacks Aerospace sector’s 12-month trailing PE ratio of 53.70 making it cheaper than its peers on relative basis as well. LMT is a Fortune 500 name.
The stock is up 4.12% over the last 12 months.
Ariel Investments, in their Q4 2020 investor letter, emphasized their Lockheed Martin Corporation (NYSE: LMT) position. Here is what Ariel Investments has to say about Lockheed Martin Corporation in their Q4 2020 investor letter:
“Lockheed Martin Corporation declined -7% in the quarter. Generally, the market expects less defense spending under Democratic administrations. Furthermore, defense stocks are considered “safe/non-cyclicals” less harmed by the COVID-19 economic downturn and less buoyed by an economic reopening. As a result, Lockheed outperformed the market as we went into the downturn in March but underperformed as we rallied in the fall and winter.”
2. 3M Company (NYSE: MMM)
Dividend Yield: 2.14%
The 3M Company is a Fortune 500 as well as Dow Jones Industrial Average constituent. The American multinational conglomerate operates in the fields of industry, worker safety, US healthcare and consumer goods. Its wide range of products include abrasives, adhesive tapes and related products. Its worldwide operations of development, manufacture and marketing have four business segments: Safety and Industrial, Transportation and Electronics, Healthcare, and Consumer. The stock is up 36.37% over the last 12 months.
3M is mentioned in Insider Monkey’s list of 30 best dividend kings for 2021.
1. Raytheon Technologies Corporation (NYSE: RTX)
Dividend Yield: 2.14%
On top of our list of the 10 best industrial dividend stocks for 2021 is Raytheon Technologies Corporation. The Massachusetts, USA-headquartered RTX is an American multinational conglomerate. The company is one of the largest aerospace, intelligence services providers, and defense manufacturers in the world by revenue and market capitalization. It provides advanced systems and services for commercial, military and government customers. RTX’s principal US government customer is the U.S. Department of Defense (DoD). The merger of Raytheon and United Technologies (manufacturer of Pratt & Whitney engines) in April, 2020 combined two companies with distinctive legacies in transformative technologies. With 195,000 employees worldwide, RTX clocked $98 billion in revenues in 2020.
As the commercial aviation business is expected to embark on a multi-year recovery, Wall Street analysts expect company’s free-cash-flow could reach $8-9 billion over the next few years. The current price to FCF ratio of around 15-17 makes RTX an attractive value stock.
The stock is up 67.07% over the last 12 months.
You can also take a peek at 10 Best Semiconductor Stocks to Buy in 2021 and 15 Most Valuable Australian Companies.
