Despite the rise in inflation, interest rates have remained relatively low. As a result, it makes sense for investors to continue buying dividend-paying equities and those with the potential to grow in the future.
Watsco (NYSE: WSO), Johnson Controls International (NYSE: JCI), and United Parcel Service (NYSE: UPS) are all viable options. With dividend yields ranging from 2.6 percent to 3.4 percent, it may be time for investors to rethink their approach to these equities.
Watsco Continues to Pay Dividends to Stockholders.
To put it another way, the business model of Watsco is rather straightforward. When it comes to HVACR equipment maintenance, a professional HVACR contractor is called out. To get the necessary equipment, components, and supplies, the contractor first diagnoses the issue. Although it doesn’t seem to be an attractive firm, Watsco stockholders have enjoyed impressive profits over the years.
Watsco’s success may be attributed to the stability of its end markets and the company’s ability to expand via acquisitions. If you have HVACR equipment in your home or workplace, it will eventually require service. Small acquisitions (especially in the Sun Belt, with Texas and Florida as the two biggest end markets by state) have worked brilliantly for Watsco’s regional development strategy in the HVACR distribution industry.
To compete with smaller distributors, the firm has a large development potential by providing contractors with digital platforms and an e-commerce facility that makes their ordering tasks simpler. Overall, a firm with a proven track record of creating value for shareholders may expect to see further development.
Johnson Controls Is Well-positioned for Long-term Growth.
As a non-key supplier to Watsco, Johnson Controls provides HVACR and construction materials, but that does not imply it is not subject to many of the same favorable trade winds. Johnson Controls. Johnson Controls has tremendous growth potential in the building efficiency and carbon emission reduction market, on top of the continuous need for HVACR. As a result of the epidemic, a new generation of building owners is focused on maintaining clean, healthy, and well-ventilated structures.
In addition to retrofitting, Johnson Controls’ OpenBlue software platform and digital services may assist clients in achieving their net-zero energy targets. Building owners may create actionable information to ensure their buildings perform properly using internet-enabled technologies and sophisticated analytics.
Investors were let down by the company’s recent performance, which was hampered by supply chain difficulties and component shortages.
Order growth is still high, and the firm is expected to bounce back rapidly after the immediate challenges are resolved, paving the door for multi-year growth. It’s also an excellent time to buy the stock.
Purchasing Ups Shares While They Are Trading at a Discount Is a Sound Investment Strategy.
UPS’s first-quarter volume growth was lower than predicted for the second time this year, upsetting investors. Managers at the firm can’t help but compare themselves to the first quarter of last year when stimulus monies were distributed. Lockdowns in China also influenced UPS’s international business.
These concerns will dissipate soon, and UPS has maintained its full-year sales and profitability projections in its previous presentations. For the most part, UPS has been able to offset the decline in volume in the first quarter by raising its prices significantly. As a result, the corporation seems to be on track to meet its previously announced 2023 goals a year early. Success in optimizing the profitability of UPS’s current network, rather than just pursuing volume growth, is evidence of CEO Carol Tomé’s strategy’s effectiveness. Because of this, UPS is diversifying into new growth areas including small and medium-sized companies (SMEs) and the healthcare industry while also increasing its profit margins and revenues. Considering UPS’s current dividend yield of 3.3 percent and the company’s strong outlook for margin improvement, it makes sense to add this stock to the portfolio of a dividend investor.
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