American exports hit a record level in October, as reported by the Department of Commerce. For investors, major exporters such as Boeing (NYSE: BA), Caterpillar (NYSE: CAT), and DuPont (NYSE: DD) are stocks that should be considered as long-term holdings. All have features that appeal to growth, value, and income investors.
Boeing, the airplane maker and defense contractor, is the largest American exporter in terms of dollar value. As the largest manufacturer of industrial and farming equipment in the world, Caterpillar derives much of its revenue from abroad, especially Asian markets with China being particularly important. DuPont is one of the world’s largest chemical firms.
In addition to being among the leading exporters for the United States, all are members of the Dow Jones Industrial Average.
Other Ways to Play the Export News
For growth investors, none of these companies are going to deliver the jaw-dropping returns of a sizzling small-cap company like Quadrant 4 Systems (NASDAQ: QFORQ) has, as detailed in previous articles on this site. But, when there is a bull market, these stocks will outperform due to the prominence of each in the investment community. All are members of many index funds, which provide a strong foundation for the stock price.
Many other investors, both institutional and individual, are attracted to those stocks due to the solid business model. Blue-chip equities such as Boeing, Caterpillar, and DuPont anchor the holdings of an investor. The diversity in the market of each is appealing. As major exporters, these companies are not reliant completely on the American economy to perform well.
Even when growth is not being delivered, a steady dividend income is provided.
These Large Blue-Chip Equities Pay Great Dividends
Investing legend Jack Bogle, founder of The Vanguard Group of mutual funds, stated in his book, Enough, that dividend income had provided about 40 percent of the historic total return for equities. When the stock market is down, the dividend income is the only positive return from the investment. At present, the average dividend for a member of the Standard & Poor’s 500 Index is around 1.9 percent.
DuPont pays a dividend of 2.93 percent. For Caterpillar, the dividend yield is 2.79 percent. The income stream provided by Boeing to its shareholders is at 1.44 percent. All have a history of increasing the dividends paid to shareholders.
In addition to rewarding shareholders in the present with a healthy dividend payment, each of these companies is positioned to do well in the future as a result of global growth.
Major Growth Will Continue Overseas
It is widely accepted that the most of the world’s economic growth in the decades ahead will be from emerging markets such as China, India, Brazil, and others. China, with more people than any other nation, already has the world’s largest economy in terms of purchasing power. By 2018, the International Monetary Fund predicts it will have the world’s largest economy as measured by gross domestic product. The increasing demand from India, the world’s second most populous country, is expected to be greater than China’s for steel and fossil fuels.
China, India, Brazil, and other emerging market nations are going to bring one billion new members to the global consumer class, according to a study by McKinsey Global Institute, the research arm of McKinsey & Company, the consulting firm.
As the world’s consumer class expands, so will the need for the goods and services of Boeing, DuPont, and Caterpillar. All have firmly established market position in the countries that will experience the most economic growth. That will result in more export opportunities for American firms. Boeing, Caterpillar, and DuPont have clearly demonstrated that each can profit from that burgeoning market demand.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.