Why Dover Corporation is a Solid Long Term Dividend Stock

Dover Corporation

The Dover Corporation  is an American manufacturing conglomerate. As a result, it manufactures a wide range of products for sale rather than being limited to either a single product or a small collection of related products. For those who are curious, the Dover Corporation has three segments, which are called Engineered Systems, Fluids, and Refrigeration & Food Equipment. Each of the three segments encompass a wide range of products in their own right. For example, Engineered Systems include everything from automation components to digital textile printing and soldering and dispensing equipment. Likewise, Fluids include everything from various fluids for the chemical, industrial, and oil and gas markets to the pumps that are used to transfer said fluids on a massive scale. Given the sheer range of products that can be found in each of the segments, it is perhaps unsurprising to learn that in a lot of respects, the segments are collections of business units that resemble nothing so much as independent and semi-independent companies. On the one hand, this means that the segments lose out on some of the efficiencies that can be had via centralizing the business units that can be found beneath their respective umbrellas; on the other hand, this means that said business units have the initiative needed to do what is best for their particular revenue-earning operations, which can be rather important in a fast-changing market to say the least.

What Makes the Dover Corporation a Strong Performer?

Here are some of the factors that make the Dover Corporation a strong performer:

Diversification

Chances are good that people who are interested in investing will have come upon the concept of diversification at some point in their research. Essentially, diversification is important because it prevents interested individuals from being too committed to a single prospect, which can have disastrous consequences if that prospect provides poor performance. This is as true for a business as it is for an investor.

In short, the Dover Corporation is spread out into a large number of business units, each of which has its own particular product to sell to interested individuals. Certainly, some of these products are connected to one another, meaning that their business units are impacted by the same trends to a considerable extent. However, other products have much weaker connections, thus making for increased independence from one another. As such, the Dover Corporation is resilient in the sense that even if some of its business units are hit hard by either an internal or an external cause, the rest of its business units are not guaranteed to suffer the same fate, thus making the overall corporation quite good at weathering serious economic issues.

Flexibility

On a related note, this makes the Dover Corporation more flexible than what a lot of people might expect from such a huge corporation. After all, its business units are run with a fair amount of independence to them rather than centralized under overarching business segments. As a result, that makes it much easier for the Dover Corporation to shift its focus from troubled sectors to sectors that it has more confidence in, seeing as how there are fewer processes that must be untangled in said process. Certainly, shifting focus in such a manner is still a complicated and time-consuming move, but in relative terms, the Dover Corporation has an easier time when compared with a lot of similar-sized counterparts. On the whole, this kind of flexibility is beneficial because it enables the corporation to pursue profitability in a way that more fixed corporations cannot hope to emulate.

Continuing Expansion

There are some huge corporations that have a challenging time expanding because they have either expanded as much as possible or have come close to expanding as much as possible when it comes to their core revenue-earning operations. Since the Dover Corporation is a manufacturing conglomerate, it has a great deal more leeway in this regard. In part, this is because it has an easier time launching new products that are connected with its existing competencies. However, it should also be noted that the Dover Corporation already has plenty of experience with incorporating new business units with new products to offer, meaning that it can move into new sectors as well.

Why Should You Consider the Dover Corporation If You Are Interested in Dividends?

With that said, the single biggest argument in favor of the Dover Corporation as a dividend stock is the fact that it has a very consistent record on the matter. In short, Dover Corporation isn’t just a dividend aristocrat that has managed to pay higher and higher dividends for 25 years and counting, it is a dividend king that has managed to pay higher and higher dividends for 50 years and counting. This is a huge point in the Dover Corporation’s favor based on a number of reasons.

Final Thoughts

First, interested individuals should never assume that past performance will guarantee future results. However, past performance can certainly serve as a strong indication of future results, particularly when nothing notable has changed in recent times. As such, while it is possible that the Dover Corporation will suddenly see an end to its multi-decade streak of being able to offer higher and higher dividends to its shareholders, the chances of that happening are not particularly high. Second, most businesses don’t have a business model that can offer that much earnings stability. Certainly, a manufacturing conglomerate isn’t one of them, not when its products are so reliant on the ever-changing trends that make up customer demand. As such, the Dover Corporation’s record suggests very capable leadership working with a very sound system, which is the kind of thing that bodes well for the future. Third, an increasing dividend over time is critical for people who are planning for the long run, both because having that income stream will be important and because the increasing value will cushion that income stream from the impact of inflation. Something that should be taken seriously by anyone who is thinking about the long-term. On the whole, interested individuals should look further into the Dover Corporation to see whether it is right for them or not, but it certainly has a very strong claim to being a good long-term dividend stock.


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