Too often, the best dividend stocks to invest in stem from little known companies. Genuine Parts Company is one of those companies about which the average household doesn’t speak. It is also one of those companies that hold the potential to increase the annual income of ordinary families drastically. For that reason only, you deserve to know more about its performance on the markets and why it is a solid dividend stock.
Genuine Parts Company operates the Napa Auto Parts business, and it is listed on the NYSE as GPC. It has a longstanding history of efficient operations and reputable customer relationships. For over 61 years, the company has been paying lucrative dividends to its shareholders. It also posts an impressive history of share price appreciation, even though it has had its ups and downs. However, as financial experts worry that it is in that corporate age that stagnates, it doesn’t seem to do so. Still, you should give it considerable thought since most businesses do stagnate after close to a decade of exemplary performance.
This company has traded sideways for decades. Even though the shares have been somewhat stagnant, the sideways trading has improved its stability evaluation and boosted its earnings. The fluctuations actually help it considering its longstanding favorable dividend payouts. As the automotive industry grows more innovative and costs of production reduce, this company is most likely going to post higher profits. It is also low risk considering its stability and market standing.
Strong Business Model
Unlike other automotive companies, Genuine Parts Company makes more than half of its revenues just supplying. The other half of its revenues diversified and includes mostly selling office and industrial products. The second half of its revenue sources is somewhat unrelated to the automotive industry, but the company does make good profits from the unorthodox business. Nonetheless, most investors consider the automotive business segment of the company while determining its future viability. The automotive industry is growing market-wise and innovatively. Investors often anticipate that CPC will grow more from that segment of its profitability.
Unlike in the past, businesses and private citizens are increasingly acquiring and using cars. Even when the sales of automotive vehicles declined slightly due to economic downturns, folks still drove their cars frequently. With longer driving hours and quickly winding mileages, comes the need for automotive repairs. These statistics work for Genuine Parts Company profitably as its products grow in demand.
Another factor that is working out beneficially for Genuine Parts Company is that cars sold toady last way longer than previous models. The trend started changing about seven years ago, and Americans can now drive cars that are as old as eight years. With long-lasting vehicles on the road, the demand has shifted from new cars to car repair parts. Again, this is a boost for the Genuine Parts Company business model.
Another reason why investors are looking more at the automotive supplies segment of Genuine Parts Company for growth is the rising price of vehicles. It is motivating Americans to repair their cars more regularly to avoid having to replace them prematurely.
Improving Operational Factors
One of the other reasons why you should look forward to investing in Genuine Parts Company is its proactive approach to the future. The company isn’t just waiting on the market factors we just discussed to grow. It is also revamping some of its redundant and out of date business strategies. For example, it was previously selling in dimly lit spaces that didn’t attract customers. People only went to the stores because they needed the products. Now, Genuine Parts Company is remodeling the retail stores to incorporate attractive lighting and impressive presentation. According to the company’s internal data, the renovated spaces are posting increased sales. Generally, the revamped spaces are also outperforming the ones yet to be revamped.
An Appetite for Growth
From the get-go, it is tempting to assume that this company is more focused on paying lucrative dividends than it is in growing. The fact that Genuine Parts Company has experienced some stock price stagnation in the past few years may compound this temptation. However, you should ignore such assumptions because this company is very competitive. It is always seeking to grow, and it only acquires other assets if they suit its strategy.
Just two years ago, CPC acquired Alliance Automotive Group to gain an edge in the European automotive supplies market. Thanks to that investment, GPC now competes as one of the three major auto part distributors in France, the UK, and Germany.
After stabilizing, operationally, from that major merger, Genuine Parts Company set out for more profitability. In recent times, CBC acquired Hennig Fahrzeugteile Group. Fortunately, the merger took less time to develop exceptional synergy, and the company is now enjoying an extra annual income of $190 million. The resulting annual revenue influx from the acquisition is projected to grow in the future as the company continues implementing more operational strategies.
Generally, this company has even more revenue growth forecasted thanks to its sound management. The execution of its new-age expansion policies indicates that the company won’t be stagnating for much longer. Again, its evaluations improved in recent times as financial analysts pay heed to its recent moves. It is not only growing organically but also in acquisitions and mergers.
The sideways trading of the company indicates that the company is based on a pretty solid business model. The organic and acquisition revenue growth suggests that the company is looking forward to a healthy financial future. It also indicates that the company is beating the U-curve of decline through innovative strategies and proactive administration. The longstanding history of generous dividend payouts suggests that the company does not engage in dangerous debt financing. It also indicates that the company values its investors and rewards them handsomely. You should really consider GPC as you look to invest in NYSE.