These 3 Industrial Dividend Stocks Have a Habit of Paying Investors More
Three industrial companies just raised their dividends within days of each other, even as their own markets softened, and the differences in how safely each one can keep doing it reveal a lot about where income investors should be looking.
Industrial stocks rarely lead a yield screen, but income investors who care about where their payout will be in five years have a reason to look. Lincoln Electric (NASDAQ:LECO | LECO Price Prediction), A.O. Smith (NYSE:AOS) and MSC Industrial Direct (NYSE:MSM) each declared a higher quarterly dividend within days of each other, and Lincoln Electric’s increase was the largest at 10.1%. These are modest yielders. They offer a paycheck that keeps growing, paid by businesses that kept raising even as industrial demand softened.
Lincoln Electric: Biggest Raise in the Group, Smallest Payout Ratio
Lincoln Electric’s board lifted the quarterly dividend to $0.87 from $0.79. It is payable on January 15, 2027, to holders of record on December 31, 2026. The trailing yield is 1.2%. At the new annualized rate of $3.48 and a share price of $262.37, the forward yield works out to about 1.33%. That makes it the lowest starting yield of the three. It also has the fastest-growing payout.
Dividend Safety Check
Coverage is wide. Trailing dividends of $3.12 per share take roughly 31% of trailing EPS of $10.01. Free cash flow came in at $222.3 million last quarter, up 87.8%, while the company returned $120 million through dividends and buybacks. For all of 2025, free cash flow of $534.2 million funded $507 million in shareholder returns. Equity of $1.55 billion stands against $2.26 billion in total liabilities, and return on equity stands at 37.7%.
The dividend record backs up the theme. The quarterly rate has gone up every year since $0.17 in 2012, passing $0.51 in 2021 and $0.75 in 2025 on the way to today’s level. Lincoln has also shown it can keep rising even as it slows. In the fourth quarter of 2025, consolidated volumes fell 6.4%, yet pricing gains of 8.9% carried the company to record full-year adjusted EPS of $9.87.
Bull Case
Demand is turning up. Second-quarter sales rose 12.0% to $1.22 billion, and adjusted EPS of $2.93 beat the $2.81 consensus. The CEO said the company is “encouraged by improved demand and capital spending in the Americas and Asia Pacific.” The shares trade at 21 times forward earnings, below the trailing 26, suggesting analysts expect earnings to keep growing into the dividend.
Risk to Watch
Growth has relied heavily on pricing. In the second quarter, price contributed 7.7% to organic growth while volume added only 2.4%, and volumes fell 4.7% in International Welding and 8.2% at Harris Products. If customers start refusing price increases, double-digit dividend raises get harder to sustain.
A.O. Smith: More Yield and a Lower Multiple While Earnings Reset
A.O. Smith raised its quarterly dividend to $0.38 from $0.36, a 5.6% increase, payable November 16, 2026, to holders of record on October 30, 2026. The trailing yield is 2.39%. At the new $1.52 annualized rate and a $58.90 share price, the forward yield comes to roughly 2.58%.
Dividend Safety Check
Trailing dividends of $1.42 per share take about 40% of trailing EPS of $3.59. Free cash flow reached $546 million in 2025. Year-to-date free cash flow is up 67% at $233.3 million, strong enough that management raised its 2026 buyback target to $300 million. More debt has shown up: total liabilities rose 28.68% to $1.80 billion after the Leonard Valve acquisition, against equity of $1.84 billion. The CEO said the company’s “strong balance sheet and free cash flow give us the flexibility to support organic growth, dividends and share repurchases.”
A.O. Smith has the longest record of the three. The company reported that its 2025 raise extended a streak of more than 30 consecutive years of dividend increases, and it has paid dividends for 86 consecutive years. Its dividend history shows the quarterly rate going up every fall, from $0.26 in late 2020 to today’s level.
Bull Case
A.O. Smith gives you the most earnings power per dollar in this group. Shares trade at 14 times forward earnings and 17 times trailing, compared with forward multiples of 21 for Lincoln and 24 for MSC. The stock is down 13.18% over the past year and sits closer to its 52-week low of $53.83 than its high of $80.92. The core business is holding up: North America sales rose 5% last quarter, boiler sales grew 21%, and adjusted EPS of $1.03 beat the $0.92 estimate.
Risk to Watch
Earnings are moving the wrong way. GAAP EPS fell 15% to $0.91, China sales dropped 28% in local currency, and full-year adjusted EPS guidance was narrowed to $3.70 to $3.85 on soft residential water heater demand. Watch for updates on the China review at the October 29 third-quarter call.
MSC Industrial Direct: Highest Yield, Thinnest Cushion
MSC Industrial Direct declared a quarterly dividend of $0.89, up from $0.87, a 2.3% increase payable November 25, 2026. The trailing yield of 2.66% is the highest of the three. At the new $3.56 annualized rate and a $130.38 share price, the forward yield is about 2.73%.
Dividend Safety Check
MSC has the tightest coverage in this group. Trailing dividends of $3.48 per share take roughly 84% of trailing GAAP EPS of $4.14. Cash flow is the better measure here. Fiscal 2025 free cash flow of $240.9 million covered the approximately $229 million returned through dividends and buybacks, and management expects free cash flow conversion of about 95% this fiscal year. Buybacks have totaled only $13.9 million year to date, so the dividend comes first. Equity stands at $1.42 billion against $1.08 billion in total liabilities.
The track record comes with one footnote. The regular quarterly rate stayed at $0.75 from 2019 into 2022, during which MSC also paid special dividends of $5.75 and $3.50. Since then, the regular rate has risen each year: $0.79, $0.83, $0.85, $0.87, and now $0.89. It kept rising even through a downturn. Fiscal 2025 revenue fell 1.35% on weak industrial demand, yet free cash flow conversion hit 122%, and the payout still went up.
Bull Case
Margins are recovering quickly. In the fiscal third quarter, adjusted EPS of $1.43 beat the $1.26 consensus, operating margin widened 170 bps to 10.2%, and net income rose 41.37%. The CEO described the company as “fundamentally doing more with less.” If profits keep growing, the payout ratio will fall without cutting the dividend.
Risk to Watch
The easy price gains are about to roll off. The CEO warned that cost progress “will be critical in the coming quarters as we begin to lap stronger benefits from price.” With the stock up 59.2% year to date and trading at 31 times trailing earnings, a single slower quarter could squeeze both the share price and the room for future raises.
Which Raise Fits Your Income Plan
Lincoln Electric pairs the fastest dividend growth with the widest coverage, A.O. Smith has the longest raise streak and the cheapest multiple, and MSC Industrial Direct pays the highest starting yield with the least room to spare. Each raised through a soft patch in its own end market, and this theme rewards that practice. For income investors who want their paycheck to keep going up, the key numbers to track are payout coverage and free cash flow, and on those, Lincoln Electric is the strongest of the three today.
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
