These “Made in the USA” Dividends Will Soar Due to This Megatrend
“Made in the USA”| We’re going to “onshore” ourselves today with two underappreciated dividend payers who are spewing out cash. One of them has witnessed a 367% increase in cash flow in only the last three years, which will fuel a speedy “dividend double” for its shareholders. Thanks to today’s greatest and least-discussed megatrend, both of these rewards have lots of opportunity to increase from here.
I’ll provide you the tickers for these two covert dividend opportunities shortly.
The first line gave away the megatrend, which is that American multinational corporations are “on shoring ,” or moving production back to the United States, in large numbers. This transition will only speed up in the coming years, making those who purchase the appropriate stocks today extremely wealthy indeed in terms of earnings (and dividends!).On shoring : This Time, It’s for Real
I know. I know. For more than 20 years, there has been talk of American manufacturing returning. But it actually is taking place!
Just last week, Intel (INTC) announced that it will spend up to $100 billion, or $20 billion, to create what may end up being the largest chip manufacturing facility in the world in Ohio.
Prior to COVID, when chips were virtually always fabricated in China or Taiwan, that would have been unheard of. Eli Lilly (LLY) recently said it will spend $2.1 billion on two new factories in Indiana, and PepsiCo (PEP) announced in July that it would establish a 1.2 million-square-foot facility in Denver, so Intel is by no means alone in this.” Made in the USA”
Foreign companies are not far behind, opting to increase production in the US and eliminate the “middleman” in the supply chain. For example, Japan’s Panasonic Energy recently announced it will establish a $4 billion EV battery facility in Kansas City. And the LEGO Group of Denmark revealed in June that it will construct a new $1 billion facility in Virginia.
It is simple to understand why Intel and other well-known brands are moving their manufacturing here since doing business abroad is less, hmm, enticing due to overcrowded ports, China’s ridiculous COVID rules, and the conflict in the Ukraine. Then there’s the strong dollar, or “dollar bulldozer,” as I like to refer to it, which “bulldozes” corporate earnings by devaluing international sales. In the middle of July, the buck rested. But now that it’s moving higher once again, one can see why the market, which is after all a measure of corporate earnings, has been struggling recently.
The best way to profit from the US manufacturing boom is to invest in midcap dividend growers.
Midcap companies, or those with market values between $2 billion and $10 billion, are the ideal to play the on shoring trend. They are our greatest on shoring purchases because, although being slightly undervalued compared to their large-cap relatives, they are still rather liquid, unlike certain small caps. Even better, the majority of midcaps are US-based and cater to US consumers, including the workers who will be vying for positions at these new operations as well as the domestic suppliers of these facilities. “Made in the USA”
Here are two midcap dividend growers that are now producing solid cash flows to support rapid payment increases.
Casey’s: A Low-Key Offshoring Move With Staggering Dividend Statistics
At first glance, Casey’s General Stores (CASY) isn’t likely to excite any yield hunters: its 0.7% current yield hardly registers. But the chain of convenience stores, which has 2,400 locations selling fuel and freshly cooked meals, has some additional dividend statistics that are really attractive. Unceasing dividend growth, with a distribution that has increased by 130% over the past ten years.
An absurdly low payout ratio, with the dividend only accounting for 11% of free cash flow during the last 12 months (FCF). Therefore, Casey’s might increase its dividend by four times tomorrow and remain below my 50% “safety line” for common equities.
An increase of 367% in only the previous three years in free cash flow. Additionally, I anticipate FCF to continue increasing quickly, thus Casey’s could increase its distribution by more than 50% while the dividend would still be secure. In fact, this company may be one to keep an eye on for a sudden special dividend .At 21.5 times expected earnings, the stock isn’t exactly “cheap,” but that ratio is close to the 5-year average. More significantly, Casey’s is “quite strong” as one of the few companies that has really generated profits this year:
Casey’s Gains in a Terrible Year We enjoy momentum stocks in times like this, just because such businesses tend to hold up well over time. And if management wants to draw attention, it may always announce a significant dividend raise or a special payout!
Casey’s operates throughout the central and mid western US, in places like Ohio, Michigan, Indiana, Kentucky, and Tennessee, where many new facilities are moving. This is something we truly enjoy about them. Sales, FCF, and dividends at Casey’s will be driven by this for many years to come.
A Small Manufacturer with 46 Years of Consistent Dividend Increases (and Counting)
Carlisle Companies (CSL), situated in Arizona, is another midcap with a lot of room to increase its dividend. As I write this, it pays out just 36% of FCF as dividends, significantly below my 50% threshold.
The business is already giving; in the previous five years alone, the dividend has quadrupled, with a staggering 38% payment increase handed out on September 1:
Carlisle’s Dividend Is Unabated Overall, payments have increased for 46 years in a row, and Carlisle is expected to see many more yearly increases in the future.
The business supplies engineered parts to a variety of sectors, including construction, aerospace, and the automotive industry. These parts include roofing, insulation, and waterproofing materials. That makes it a direct beneficiary of the new billions of dollars in support for building efficiency provided by the Inflation Reduction Act.