While most investors like to focus on dynamic areas of the economy like alternative energy or fintech applications, the traditional business of manufacturing is a powerful industry that should not be overlooked. According to some of the latest data from the federal government, U.S. manufacturing contributed $2.3 trillion to GDP — about 12% of economic output — and employed almost 15 million people to represent 10% of the American workforce.
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These companies often aren’t as growth-oriented as some of the flashy momentum stocks on Wall Street. But they sometimes offer a level of reliability and income potential that Silicon Valley software firms simply cannot match.
If you’re looking for established manufacturing stocks with strong dividends, consider one of the following names:
| Stock | Forward dividend yield (as of July 10 close) |
| 3M Co. (ticker: MMM) | 6.2% |
| CNH Industrial NV (CNHI) | 2.8% |
| Cummins Inc. (CMI) | 2.5% |
| Energizer Holdings Inc. (ENR) | 3.6% |
| Kennametal Inc. (KMT) | 2.8% |
| Lockheed Martin Corp. (LMT) | 2.6% |
| Stanley Black & Decker Inc. (SWK) | 3.4% |
3M Co. (MMM)
Chemicals giant 3M is the manufacturer behind some 60,000 different products that span many names that are recognizable to most investors. These range from consumer products like Command hangers to Post-It notes to health care materials, like the N95 respirators that became staples during the COVID-19 pandemic, to performance coatings like Scotchgard stain blockers. 3M is a massive company with staying power, valued at more than $50 billion. This scale allows for reliable income, as it has paid dividends to its shareholders without interruption for more than 100, including more than 60 consecutive, years of dividend increases.
Dividend yield: 6.2%
CNH Industrial NV (CNHI)
CNHI is a heavy machinery company that specializes in farm equipment like tractors, harvesters and cultivators. It also produces construction equipment like excavators and loaders. While perhaps not as well known in the U.S. as its competitors, CNHI is well-established and generates more than $20 billion in annual revenue. That helps fuel a generous dividend that, while only paid once per year, adds up to a payout that is significantly higher than the typical domestic dividend stock in the S&P 500 index. Distributions typically come in spring, so keep that in mind because buying now means you’ll have to wait longer than the other stocks on this list to get your payday.
Dividend yield: 2.8%
Cummins Inc. (CMI)
For more than 100 years, Cummins has been a manufacturing stock that has dominated the engine industry. And while traditionally it has been known for its best-in-class diesel engines, it currently specializes in natural gas, electric and hybrid powertrains on top of this legacy business. The $35 billion industrial icon is approaching 20 years of consecutive dividend increases, with its current payout of $1.57 share roughly twice the 78 cents it was paying back in 2015. And with those dividends only at about one third of total earnings, this income stream seems ripe for additional increases in the years ahead.
Dividend yield: 2.5%
[See: 8 S&P 500 Stocks to Buy With the Most Upside.]
Energizer Holdings Inc. (ENR)
Best known for its household batteries, Energizer is a manufacturer of many other specialty batteries for use in solar, automotive and industrial applications. It also creates lighting products, refrigerants and automotive parts. Though just $2 billion or so in market value, Energizer is nevertheless an iconic brand with staying power. There’s admittedly not breakneck growth in the core battery business, but ENR stock has kept pace with the S&P 500 over the last year of “risk on” gains for markets — and it pays a consistent 30-cent dividend each quarter on top.
Dividend yield: 3.6%
Kennametal Inc. (KMT)
The smallest and perhaps least recognizable stock on this list, Kennametal is a $2 billion manufacturer that is focused on “super hard” materials used in metal cutting and infrastructure applications. This means industrial drill presses, tooling systems, airframes and aerospace components, heavy duty parts for power generation systems, and other similar gear. It’s a specialized business, to be sure, but KMT’s expertise and long operating history makes it a critical manufacturer that provides goods its customers simply can’t do without. The company pays a consistent 20-cent dividend each quarter thanks to its steady operations, which is less than half of all profits and thus highly sustainable for the years ahead.
Dividend yield: 2.8%
Lockheed Martin Corp. (LMT)
Lockheed is one of the most familiar names in aerospace and defense, manufacturing everything from missiles and fire control systems to helicopters to fighter jets to unmanned drones. Founded in 1912, LMT is the brains behind such iconic war machines as the F-117 Nighthawk stealth fighter, the F-16 Fighting Falcon and massive C-130 Hercules military transport plane. The sad realities of the war in Ukraine have reinforced the importance of this private sector expertise as part of America’s defense plans, and LMT has risen about 20% in the last two years as a result — while the S&P 500 is mostly flat in the same period. The company also pays a quarterly dividend of $3 a share on top of that, twice the $1.50 per share it paid back in 2015.
Dividend yield: 2.6%
Stanley Black & Decker Inc. (SWK)
Back in 2009, after both companies took it on the chin in the wake of the financial crisis, toolmaker Stanley agreed to buy rival Black & Decker for about $3.5 billion in an all-stock transaction, creating a global tool maker worth about $8.4 billion at the time. The combined company is now valued at almost $14 billion, with a dominant position manufacturing everything from lawnmowers to hand tools to automotive components to heavy equipment for third-party manufacturing companies. Back in early 2010, the company was paying a dividend of just 33 cents after its merger. Now it delivers income of 80 cents per share each quarter, a significant increase but a figure that is still less than two thirds of next year’s profits and thus very stable and sustainable.
Dividend yield: 3.4%
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7 U.S. Manufacturing Stocks With Strong Dividends originally appeared on usnews.com
Update 07/11/23: This story was previously published at an earlier date and has been updated with new information.
