Remember the industrial sector.
Most investors overlook the industrial sector in favor of more growth-oriented technology names or for stable consumer stocks that are more familiar to them. However, industrial companies play a vital role in the global economy. Many firms in this sector are the first link in the chain for businesses, whether those customers make high-tech mobile devices or the packaged foods you buy at the grocery store. These industrial stocks aren't well known because you don't see their brands regularly, but they are multi-billion-dollar businesses with entrenched relationships around the world. That makes them stable and this supports reliable dividend payments. If you're an income-oriented investor, you should give serious consideration to the industrial sector and these nine companies.
ABB Ltd. (ticker: ABB)
Switzerland-based ABB is the perfect example of an under-the-radar industrial stock worth a look for your income portfolio. It's a massive $40 billion stock, neck-and-neck with insurance giant Progressive Corp. (PGR) or electric vehicle icon Tesla (TSLA) in terms of market value. ABB also employs some 150,000 people worldwide, and boasts nearly $30 billion in annual revenue across a diversified business that deals with robotics, transportation and automation. Manufacturers need ABB gear to run their factories and move their goods around the global economy. As a result, it has a reliable business that supports a generous dividend you can bank on for the long haul.
Current yield: 4.2%
Amid all the talk of a trade war with China, heavy equipment manufacturer Caterpillar has experienced volatility. But despite the ups and downs, CAT is pretty much right where it was to start the year -- and longer term, it has more than doubled its share price since 2016. That's because you simply can't compete with the brand and scale of this nearly $70 billion industrial giant. From construction equipment to mining machinery to industrial turbines, CAT helps support the very foundations of the economy. Even if construction of roads, factories and office buildings may slow during tough times, it never completely stops -- and neither does demand for Caterpillar equipment.
Current yield: 3.4%
As a leading brand in diesel technology, Cummins is literally the engine that moves the largest businesses in the world. You'll find its brand on top of emergency generators, trucks, trains and agriculture gear all around the globe. Admittedly, a move away from fossil fuels poses a long-term threat to CMI. However, "clean diesel" engines that are more fuel efficient and create less exhaust are an important bridge between the economy of today and a distant future where everything runs on renewable resources. Growth is flat, but with $22 billion in annual revenue and a generous dividend that is only about one third of total earnings, this industrial stock should keep paying investors for many years to come.
Current yield: 3.4%
Covanta Holding Corp. (CVA)
Covanta is an industrial waste management firm that operates primarily in the United States and Canada, working with municipalities to clean things up and sometimes even turn that trash into electricity. The business is dirty, ranging from wastewater treatment to recycling landfill operations, but it is a decidedly crucial service for the communities CVA serves. Best of all, this industrial stock is decidedly insulated from big-picture downturns since humans will keep producing waste no matter what happens to the stock market. And as a shareholder, you'll get a portion of Covanta's profits returned back to you via reliable dividends.
Current yield: 5.9%
Emerson Electric Co. (EMR)
Missouri-based Emerson is a technology and engineering company that serves a wide array of industries. Its measurement and analytics gear is used in oil and gas refining, pharmaceuticals and food and beverage applications while its climate technologies arm focuses on refrigeration and HVAC businesses for both commercial and residential use. Heat sensors and flow monitors aren't incredibly sexy pieces of technology, but EMR stock thrives thanks to a wide variety of customers and constant demand for its products. And with a dividend that remains roughly 60% of total earnings, there is plenty of potential for investors to see increased income from this stock in the future.
Current yield: 3.1%
Eaton Corp. (ETN)
Eaton is a power management company that provides all manner of components to a wide variety of businesses. From power distribution gear used by utilities to emergency lighting to circuit breakers, the firm is a leading brand in this special corner of the industrial sector. It also increasingly is involved in renewable energy applications including electric vehicle technologies and hybrid vehicle power trains. Many alternative energy stocks can be volatile, as consumers and businesses are still trying to make sense of the transition away from fossil fuels. However, Eaton provides a great bridge between the two worlds and ETN technology will be used for many years to come.
Current yield: 3.7%
Fluor Corp. (FLR)
Another unsung industrial name that touches a host of key businesses is Fluor, an engineering firm specializes designing and building what it terms "the world's toughest projects." FLR's portfolio includes oil and gas refineries, public transportation systems, bridges, mining facilities and all manner of large-scale projects that are indeed impressive to behold. Construction and related services are incumbent upon someone with deep pockets, but thanks to close relationships with the biggest corporations in the world as well as local and national governments, there's no shortage of clients that keep coming back to Fluor. And FLR offers income investors a dividend that is more than twice the typical stock in the S&P 500.
Current yield: 4.7%
3M Co. (MMM)
Formerly known as the Minnesota Mining and Manufacturing Co., 3M's roots are more than a century old. Over the years, the materials and products produced by 3M have grown and the array of related products it offers has simply exploded. The list ranges from special adhesives and tapes to pet-care products, automotive coatings and plastics, as well as insulation for residential and commercial use. 3M's tally of products is simply tremendous. This resulted in an incredibly diversified industrial stock that shareholders can depend on in both good times and bad. The same can be said for MMM's dividend, too.
Current yield: 3.5%
PotlachDeltic Corp. (PCH)
This stock is a lumber, paper and cardboard producer that was started more than a century ago and has seen restructuring and consolidation over the years, particularly in the last decade. The rise of digital technologies and e-commerce has created big demand for brownstock that is used to make all those boxes that get delivered from Amazon.com (AMZN) and others. While paper isn't a growth business, there are many areas of the global economy that rely on this product. And the companies like PCH that deal in this product are all but guaranteed a steady business now that competition has faded away. That's great for long-term dividend investors looking for income in this industrial stock.
Current yield: 3.8%
Industrial dividend stocks to buy:
-- ABB Ltd. (ABB)
-- Caterpillar (CAT)
-- Cummins (CMI)
-- Covanta Holding Corp. (CVA)
-- Emerson Electric Co. (EMR)
-- Eaton Corp. (ETN)
-- Fluor Corp. (FLR)
-- 3M Co. (MMM)
-- PotlachDeltic Corp. (PCH)
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