Energy and industrial companies drive the global economy. Many of the simplest products and services you enjoy require massive factories and energy to produce enough supply to meet the demands of the global population, which has grown past 8 billion people today.
The ups and downs of the economy can pose a risk to energy and industrial stocks, but some are diversified and well-managed enough to navigate that adversity. And nothing speaks to that like dividend growth.
These four companies have increased their dividends for decades and are poised to give you pay raises for decades longer.
1. ExxonMobil
Energy makes the world go 'round, and ExxonMobil(NYSE: XOM) is at the center of making it happen. The energy giant is an integrated oil and gas company exploring, producing, refining, and selling various energy products worldwide. While not entirely dependent on commodity prices, low oil and gas prices can negatively impact ExxonMobil's business.
Yet ExxonMobil has paid and raised its dividend for 42 consecutive years, through geopolitical conflicts, recessions, and more. Over the past few years, high commodity prices have padded ExxonMobil's pockets with cash, reinforcing a massive balance sheet with nearly $400 billion in assets versus just $6 billion in net debt. You can buy ExxonMobil and feel great that the stock's 3.4% starting dividend yield will continue coming through.
2. Illinois Tool Works
Diversification can help a company -- when one part of the business stumbles, another can pick it up. That's one of the secrets behind Illinois Tool Works' (NYSE: ITW) streak of 61 years of dividend growth, making the stock a Dividend King. The company serves many markets, including business units dedicated to automotive, food equipment, electrical testing and measurement, welding, polymers and fluids, construction products, and specialty products.
It seems as if Illinois Tool Works has business opportunities as long as the world continues building things. The company's success stems from astute management that doesn't let the balance sheet take on too much debt. Today the business is leveraged at just 1.9 times its EBITDA, a manageable ratio.
Finally, a 52% dividend payout ratio also leaves lots of breathing room for the dividend.
3. Badger Meter
Most investors have probably never heard of Badger Meter(NYSE: BMI), but perhaps it's time that changed. Badger Meter is a flow and measurement technology company that operates in the water, energy, industrial, and agricultural industries. It sells devices that measure and analyze liquid and gas flow, such as measuring how much water a farmer uses to water their crops or analyzing the flow of gases used in fracking.
Demand for Badger Meter's products seems to grow as an increasingly crowded world demands more efficiency to produce the most resources for the least amount of money. The company is a dividend rockstar, building on a 32-year streak of consecutive dividend raises. The dividend payout ratio is just 30% of cash flow, so there is room for potentially decades of dividend growth ahead.
4. NextEra Energy
Renewable energy is steadily carving out its role in the global energy picture, and NextEra Energy(NYSE: NEE) plays a vital role as one of the world's largest renewable producers. It's also America's largest electric utility, bringing power to more than 12 million people in Florida. Renewable energy has become over 20% of electricity in America, due partially to many corporations striving to reduce their carbon footprints. It's been an excellent boost for NextEra, which has grown enough to outperform the S&P 500 long-term.
NextEra has paid and raised its dividend for 30 consecutive years, and that's not likely to end soon. The company's management is still confident in NextEra's prospects, telling shareholders it will raise the dividend by at least 10% annually through at least 2026. The dividend payout ratio is just half of the company's earnings, so a financial safety net is also in place.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends NextEra Energy. The Motley Fool has a disclosure policy.
