Graco Hikes Dividend 10.4%
Today’s chart proves that boring stocks can provide exciting returns.
Longtime readers know we love dull companies. “Boring” products like solvents, chemicals, and coatings don’t get much play at cocktail parties. These businesses, however, tend to generate robust profits—which means lucrative dividends for investors.
We’re seeing this right now in Graco Inc. (NYSE:GGG). The company makes industrial pumps and spray equipment for fluid handling. You’ll find this gear in all sorts of industries, from aerospace and automotive manufacturing to construction and agriculture.
Needless to say, the stock doesn’t get much mention around water coolers. But this quiet company controls roughly 25% of the $2.1-billion industrial pump and sprayer market, has a 58% share in the $600.0-million contractor market, and a nine-percent share in the $1.2-billion lubrication market. And by focusing on complex products for niche uses, Graco faces little direct competition.
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This formula has turned the business into a cash machine. Over the past 30 years, shares have delivered a total return—including dividends—of 21,130%. In the latest Graco stock news, management announced a three-for-one stock split.
Graco has a long stock split history. Since the company went public in 1969, shareholders have seen 12 Graco stock splits. While these actions don’t create any value for shareholders, they’re an optimistic signal from management. (Source: “Graco Announces 3-for-1 Stock Split and Increases Quarterly Dividend by 10.4 Percent,” Graco Inc., December 8, 2017.)
Chart courtesy of StockCharts.com
Shareholders have also cashed in on the company’s success through growing distributions. In the same press release, management raised Graco’s quarterly stock dividend 10.4% to $0.3975 per share. Since 2000, this payout has grown nearly tenfold.
It’s more proof that boring stocks can produce exciting returns.