Smart Dividend Portfolio Edition #81: Welded Wealth
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Dear Investor,
Welcome to the 81st edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: Oct 06, 2025
Stock indexes ended mixed on Friday, as macro and markets news and reports drove sentiment in different ways. Still, all three indexes finished the week in the green, with the Dow Jones Industrial Average (DJIA) rising 1.10%, the S&P 500 (SPX) gaining 1.09%, and the Nasdaq-100 (NDX) jumping 1.15%. All three major averages hit record highs intraday, but only S&P 500 and the DJIA notched fresh all-time highs at close on Friday, as a rally in the Nasdaq-100 was dragged down by declines in several key tech names.
Stocks continued to be largely unfazed by the U.S. government shutdown dragging into its third day, as traders bet it would be short-lived, while private data continued to support the outlook for further Federal Reserve rate cuts. Investors continued to pile into the AI names, with the narrative supported by a burst of new partnerships and potential deals signaling that investments in the technology are slated to continue soaring. The news about ChatGPT creator OpenAI reaching a $500 billion valuation – and becoming the most valuable startup in history – added fuel to the fire of the AI-driven rally.
Still, the Nasdaq-100 failed to keep its intraday record, declining below Thursday’s all-time high, with the key pressure factor arriving from a drop in Palantir (PLTR) after a media report on security flaws in its systems. Declines among several large- and megacaps – such as in Meta (META) on product demo failures and safety concerns, in Netflix (NFLX ) on consumer boycott, and in Applied Materials (AMAT) on a larger expected hit to revenue from export restrictions than previously communicated – added to the pressures on the large-cap tech index. This has sparked some profit-taking in stocks that previously notched strong gains, such as Nvidia (NVDA) – despite broad optimism and strong overall AI sector performance.
The government shutdown has suspended the September nonfarm payrolls release, and if prolonged, could delay other key reports. Meanwhile, investors are turning to proxies such as ADP and other private sources, which offer insights into the state of the economy and the job market but lack the extensive coverage of the BLS report.
ADP reported a loss of 32,000 private-sector jobs in September, indicating continued weakness in employment. At the same time, ISM Services index fell to 50, indicating stagnation, as business activity shrank for the first time since the pandemic. The weaker-than-expected reports further convinced the markets that the Fed will continue easing its monetary policy despite a data blackout. Futures markets and the CME FedWatch are now both signaling near-certainty for October’s rate decrease and about 80% chance of another cut in December.
The lack of response from the markets to the government shutdown is not surprising, given that these events haven’t been a major headwind for the stock performance in recent decades, with mixed but moderate moves in stock indexes. Over the past 50 years, there have been 22 shutdowns (including the technical ones, lasting less than 24 hours). Most of these events lasted just a few days, having no impact on the broader economy; in hindsight, stock markets were correct in brushing them off. Stock performance over the longer periods of government blackouts was also mixed, generally influenced more by macroeconomic factors than the shutdown itself. Overall, the S&P 500 gained an average of 0.3% during the episodes, according to Carson Group analysis.
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This Week’s Quality Dividend Stock Idea
Lincoln Electric (LECO) is a U.S.-based global manufacturer specializing in arc welding equipment, consumables, plasma and oxy-fuel cutting systems, and automation solutions. Its operations span welding products, cutting technologies, and advanced automation, serving industries such as manufacturing, construction, automotive, and energy. LECO is recognized as a worldwide leader in welding technology and a key provider of automated solutions for industrial applications.
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Forged Legacy
Lincoln Electric was founded in 1895 in Cleveland, Ohio, by John C. Lincoln, who initially designed a direct current electric motor. Within a few years, the company shifted its focus to welding, a breakthrough technology that became critical to industrial manufacturing. James F. Lincoln, who joined the company in 1907, shaped its culture with a strong emphasis on innovation, quality, and employee engagement.
Through the early and mid-20th century, Lincoln Electric pioneered arc welding machines and consumables, technologies that transformed shipbuilding, automotive production, and heavy industry. By mid-century, it had become a global leader in welding products, establishing operations across Europe, Asia, and Latin America to serve a growing industrial base. This expansion positioned the company to benefit from large-scale infrastructure development and the rise of manufacturing economies worldwide.
In the modern era, Lincoln Electric accelerated growth through strategic acquisitions and diversification. A pivotal milestone came in 2017 with the purchase of Air Liquide Welding, which significantly strengthened its European presence and broadened its specialty consumables and automation portfolio. In 2022, the company made another major move with the acquisition of Fori Automation, a provider of advanced assembly and material-handling systems. This acquisition significantly advanced the company’s strategic goals by expanding its automation capabilities, broadening its market reach, and enhancing its earnings profile.
The expansion continued in 2024 with the acquisitions of RedViking, an integrator of autonomous guided vehicles and proprietary software systems; Inrotech, a Danish automation firm specializing in adaptive welding systems; and Vanair Manufacturing, which added mobile power solutions such as compressors, generators, and electrified equipment. In 2025, Lincoln Electric fully acquired Alloy Steel Australia, following the purchase an initial minority stake earlier that year. This deal expanded the company’s portfolio into proprietary wear plate solutions, engineering services, and digital monitoring technologies for the Asia-Pacific mining sector.
Today, Lincoln Electric, with a market capitalization of around $13 billion, builds on its industrial legacy through strategic investments in automation, advanced manufacturing, and digital innovation, reinforcing its leadership in global welding and cutting technologies.
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Welded Growth
Lincoln Electric generates revenue primarily through two product categories: consumables and equipment. Consumables – welding, brazing, and soldering filler metals – are a recurring revenue driver, contributing over half of the company’s sales. Brazing refers to a metal-joining process in which two or more metal parts are bonded together by melting and flowing a filler metal into the joint, but without melting the base materials themselves. Equipment sales include arc welding machines, plasma and oxy-fuel cutting systems, wire feeders, fume control equipment, automation systems, and specialty gas regulators.
The company’s operations are organized into three key segments: Americas Welding, International Welding, and The Harris Products Group. The Americas segment covers welding operations across North and South America, serving industrial, construction, and infrastructure markets. The International segment extends Lincoln Electric’s reach into Europe, Africa, Asia, and Australia, offering regionally adapted welding solutions. The Harris Products Group manages Lincoln Electric’s cutting, soldering, and brazing businesses, specialty gas equipment, and retail operations in the U.S., serving both professional and consumer markets.
A cornerstone of Lincoln Electric’s growth model is the balance between recurring consumables and higher-margin automation systems. While consumables provide dependable cash generation tied to ongoing maintenance and repair activity, automation has evolved into a major growth driver. The company has steadily expanded its automation capabilities through internal innovation and strategic acquisitions in robotics, adaptive welding technologies, and autonomous guided vehicles. These initiatives address rising global demand for productivity, precision, and labor-saving manufacturing solutions.
Under its “Higher Standard 2025” strategy, Lincoln Electric has set a goal of reaching $1 billion in annual automation sales, and it appears to be reaching this target ahead of schedule. Automation sales have nearly doubled since 2020, reaching over $900 million in 2025, reflecting consistent growth in adoption and market share. Operating margins have exceeded 17% for nearly three years, surpassing previous targets of 16%. As volumes scale, automation margins are expected to converge toward the corporate average. Management anticipates that once trade policy clarity improves and deferred customer capital spending resumes, automation demand will inflect upward, supported by a robust quoting pipeline of around $215 million per quarter.
Acquisitions remain an important lever for long-term growth, typically adding 300–400 basis points to annual revenue expansion. Recent deals have broadened the company’s portfolio into mobile power, wear plate technologies, and advanced automation systems, deepening its presence in high-value industrial applications.
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Industrial Spark
In the Americas, the Heating, Ventilation, and Air Conditioning (HVAC) sector continues to drive growth, benefiting from a surge in data center construction, which is spurring new infrastructure and cooling system installations. Factory utilization across the region has remained stable, reflecting a healthy industrial production environment. The energy market has been another bright spot, supported by robust project activity in power generation and pipeline construction. Broader industrial markets grew at a high single-digit pace, highlighting continued strength in manufacturing and repair work.
End-market performance was uneven, with agricultural machinery makers facing temporary softness from inventory destocking, while the automotive sector saw steady demand for welding and automation equipment despite modest production growth. Construction activity varied with project timing but remained stable overall, setting the stage for continued regional growth.
International results were mixed, as sales in EMEA and Asia-Pacific declined amid project delays and macroeconomic challenges, particularly in Turkey, while core Europe achieved modest growth. The full acquisition of Alloy Steel is expected to strengthen international profitability and support a margin recovery that has more than doubled since 2015.
Lincoln Electric’s operational strategy remains grounded in agility and efficiency. The company uses the last-in, first-out (LIFO) accounting method, which recognizes the most recent – and typically higher – inventory costs first when calculating the cost of goods sold. This approach accelerates the recognition of inflationary pressures, providing a more accurate view of current expenses. It also drives Lincoln Electric to adjust its pricing rapidly, maintaining profitability and pricing discipline even in inflationary environments. The company’s pricing agility, reflected in five price increases during the first half of 2025, has helped offset higher input costs, including tariffs, while maintaining strong relationships with distributors and OEM partners.
Cost-saving initiatives continue to deliver both temporary and structural benefits. In the second quarter, Lincoln Electric achieved $11 million in savings, which helped support margins despite higher incentive costs and $8.5 million in LIFO charges. Year-to-date LIFO charges totaled roughly $10 million and are expected to repeat in the second half of the year.
Looking ahead, management remains optimistic about the company’s trajectory over the near term. Continued reshoring incentives in the U.S. are likely to support industrial activity, particularly in manufacturing and infrastructure. Structural cost initiatives, coupled with automation expansion and international recovery, position Lincoln Electric for incremental margins in the mid-20% range on mid-single-digit volume growth.
In sum, Lincoln Electric has continued to execute on its balanced growth strategy, combining resilient consumables demand, disciplined pricing, structural cost savings, and targeted acquisitions. This formula has enabled it to outperform through periods of macro uncertainty and sets the stage for further earnings expansion and cash flow growth as global industrial cycles strengthen.
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Solid Returns
Lincoln Electric has delivered consistent growth and operational strength over the past three years, with revenue expanding at a CAGR of 5% and EPS increasing by 13.7%. This growth reflects effective price management, strategic acquisitions, selective volume gains, and efficiency improvements.
In the second quarter of 2025, the company exceeded expectations despite inflationary and policy-related headwinds. Sales rose 6.6% year-over-year to $1.09 billion, driven by pricing actions, acquisitions, and favorable currency movements, partially offset by softer volumes. Adjusted operating income increased 10% to $195 million, resulting in a 17.9% margin, up 50 basis points from the prior year. Adjusted EPS advanced 11% to $2.60, surpassing Street estimates, while free cash flow conversion exceeded 100%, underscoring Lincoln Electric’s strong financial foundation.
Organic sales rose around 3%, supported by steady demand for consumables, while equipment sales were affected by deferred capital spending amid tariff uncertainty. Gross profit climbed nearly 6% to $406 million, with margins slightly lower at 37.3% due to volume softness. Still, operating profitability improved meaningfully, as incremental margins reached 26%, reflecting the company’s ability to efficiently convert revenue growth into earnings.
Cash generation remained robust, with operating cash flow up 9% year-to-date to $330 million and a conversion rate of 104%. Working capital efficiency held firm at 18.4% of sales in the first half of FY25, demonstrating disciplined asset utilization. Lincoln Electric invested $57 million toward growth initiatives, including capital expenditures and its initial investment in Alloy Steel. Return on invested capital (ROIC) stood at a strong 21.7%, ranking among the top 10% in the industry.
By segment, the Americas Welding division grew 7%, led by pricing gains and the Vanair acquisition, though margins softened slightly due to incentive costs and acquisition-related dilution. The International Welding segment saw revenue decline 2.5% amid weaker demand in EMEA and Asia-Pacific, but margins improved sharply to 12.7% as cost efficiencies and the Alloy Steel acquisition continued to support international profitability. The Harris Products Group delivered standout performance, with sales up 19% on strong HVAC demand and retail restocking, achieving record margins of 19.4%.
Management raised full-year guidance to reflect first-half momentum and the full consolidation of Alloy Steel. Organic growth is now projected in the low-single-digit range, with Alloy Steel expected to add $20–25 million in second-half sales and $0.07 in EPS. Margins are anticipated to remain steady to slightly higher, supported by pricing discipline and an additional $10–15 million in efficiency savings. Structural cost programs are expected to deliver $60 million in savings by year-end, with half of those gains considered permanent.
Capital discipline remains central to Lincoln Electric’s strategy. The company plans to invest $100–120 million in capital expenditures this year, targeting a free cash flow conversion rate of about 90%. Its return metrics continue to rank among the best in the industry, with return on equity (ROE) and return on assets (ROA) in the top 5%, reflecting exceptional profitability and prudent capital management.
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Dividend Flow
Lincoln Electric has built a strong reputation for rewarding shareholders through a disciplined capital return program that includes both dividends and share repurchases. The company has raised its dividend for 29 consecutive years, reflecting a long-standing commitment to consistent and sustainable shareholder returns and earning it the status of a Dividend Aristocrat. Its dividend yield stands at about 1.3%, slightly above the industrials sector average of 1.26%, while the payout ratio remains conservative at roughly 32% of adjusted earnings. Over the past decade, Lincoln Electric has increased its dividend by an average of 10.2% annually. In the most recent quarter, the company paid a dividend of $0.75 per share, extending its record of annual increases.
In addition to dividends, share repurchases play a key role in Lincoln Electric’s capital allocation strategy. During the second quarter of fiscal 2025, the company returned $169 million to shareholders, including $42 million in dividends and $127 million through buybacks. Under its ongoing repurchase authorization for up to 10 million shares, Lincoln Electric still had 5.5 million shares available for repurchase as of June 30, 2025, though it is not obligated to buy back stock on a set schedule.
The company’s disciplined execution and earnings momentum have supported strong stock performance, with shares climbing roughly 24% over the past year. This gain has been driven by consistent earnings growth, repeated quarterly beats, upward estimate revisions, and innovation in high-value markets such as automation and defense.
From a valuation perspective, Lincoln Electric’s shares trade at a modest premium to their historical averages based on non-GAAP trailing and forward P/E ratios, EV/EBITDA, and price-to-book value – an encouraging sign that reflects investors’ confidence in the company’s consistent earnings growth and strong free cash flow generation. Notably, when compared with peers such as Illinois Tool Works, ESAB, and Rockwell Automation, Lincoln Electric’s valuation still sits within a reasonable and attractive range based on trailing and forward P/E ratios as well as EV/EBITDA multiples, offering investors a balanced blend of quality and value.
Analysts maintain a broadly optimistic outlook on the stock, supported by the company’s proactive cost management strategy. Lincoln Electric continues to combine temporary, volume-based savings with accelerated structural restructuring to limit margin and EPS pressure, a playbook that has proven successful in previous downturns. This approach positions the company well for a rebound once market conditions normalize. Consensus estimates suggest an average potential upside of about 7%, with the most bullish forecasts projecting gains of up to 20%. Supporting this view, a discounted cash flow analysis indicates that Lincoln Electric is currently trading at a roughly 3% discount to its intrinsic fair value.
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Investing Takeaway
Lincoln Electric’s consistent dividend growth reflects the company’s disciplined approach to capital allocation and commitment to shareholder value. With a long history of annual increases, the company has built a reputation for reliability and resilience, even during cyclical industrial slowdowns. Its dividends are supported by strong free cash flow generation, efficient operations, and a conservative payout policy that leaves ample room for reinvestment and buybacks. This balance between income stability and growth potential positions Lincoln Electric as an attractive choice for investors seeking both steady returns and long-term capital appreciation. Backed by its durable business model, expanding automation portfolio, and prudent financial management, the company’s income potential appears well supported for the years ahead.
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Dividend Investor Portfolio
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Portfolio News
▣ Amgen (AMGN) reported that its Phase 3 VESALIUS-CV trial successfully met its dual primary endpoints, showing that Repatha (evolocumab) significantly lowers the risk of major cardiovascular events in individuals without a prior heart attack or stroke. The study enrolled over 12,000 high-risk patients, most of whom were already receiving statins or other bad cholesterol–lowering therapies, and followed them for a median of about 4.5 years.
The results showed that adding Repatha to standard therapy provided a meaningful reduction in cardiovascular events compared with standard treatment alone. No new safety concerns were identified during the trial, supporting Repatha’s established safety profile. With cardiovascular disease still the leading cause of death worldwide, these findings expand Repatha’s potential use into primary prevention, offering high-risk patients without prior events a new option to reduce their long-term cardiovascular risk.
▣ BlackRock’s (BLK) Global Infrastructure Partners (GIP) is in advanced discussions to acquire Aligned Data Centers in a deal valued at approximately $40 billion, reflecting the company’s strategic focus on AI infrastructure investments, according to Bloomberg. GIP is also nearing a $38 billion acquisition of the utility company AES, further diversifying its portfolio.
▣ ExxonMobil (XOM) announced plans to lay off approximately 2,000 employees globally, representing about 3% of its workforce. The company aims to enhance operational efficiency by consolidating smaller offices into regional hubs. Approximately half of the layoffs will occur in Europe, with the remainder affecting operations in Canada, specifically at the Calgary-based Imperial Oil Ltd., which is nearly 70% owned by Exxon. Imperial Oil confirmed a 20% workforce reduction and the closure of its Calgary office. As of late 2024, Exxon employed around 61,000 people. The layoffs align with ongoing industry trends, as energy companies face challenges stemming from low crude oil prices and consolidation.
▣ The ex-dividend date for JPMorgan Chase (JPM) is October 06 and its dividend will be paid on October 31.
▣ Kroger (KR) announced an expanded partnership with DoorDash to provide rapid grocery delivery from nearly 2,700 stores nationwide, including brands like Ralphs, Fred Meyer, and Mariano’s. This move is expected to enhance customer access to fresh groceries and intensify competition with other delivery services.
Additionally, Kroger’s board declared a quarterly dividend of $0.35 per share, payable on December 1, 2025, to shareholders of record as of November 14, 2025.
▣ Lockheed Martin (LMT) secured a $10.33 billion modification for its CH-53K helicopter program. The deal covers a total of 92 full-rate production aircraft for the U.S. Marine Corps, including associated program support. Work is expected to conclude in February 2034, with $1.71 billion in FY25 procurement funds obligated at award. Additionally, the company received a $9.8 billion contract to supply 1,970 PAC-3 MSE interceptors for the U.S. Army.
▣ PepsiCo (PEP) is expected to report its Q3 earnings on October 9. Analysts anticipate EPS of $2.26, reflecting a 2.18% year-over-year decline, and revenue of approximately $23.9 billion, marking a 2.4% increase.
The company’s stock has faced challenges this year, declining around 7% year-to-date amid softening demand in its North American beverage and snacks segments. In response, PepsiCo has been implementing cost-cutting measures and exploring strategic changes, including efforts to streamline operations and enhance shareholder value.
▣ In a notable legal development, Qualcomm (QCOM) secured a key victory against Arm Holdings, reinforcing its licensing and intellectual property position. A U.S. District Court recently upheld a December 2024 jury verdict, confirming that Qualcomm and its subsidiary Nuvia did not violate existing licensing agreements with Arm. This ruling concludes a multi-year dispute over licensing terms and royalties, which had raised concerns about potential financial liabilities and operational disruptions for Qualcomm. By affirming the jury’s decision, the court eliminated uncertainty around Qualcomm’s licensing practices, protecting both current and future chip development initiatives. The outcome also strengthens Qualcomm’s credibility in negotiating licensing arrangements with other technology partners and underscores the company’s ability to defend its contractual and intellectual property rights.
▣ Verizon (VZ) has set its next ex-dividend date for October 10, and the company plans to distribute the dividend on November 3.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.94% | +5.94% | $5,876.30 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Dec 11, 2025 | Jan 01, 2026 | 2.46% | $6.16 |
| Amgen (AMGN) | Nov 18, 2025 | Dec 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Dec 04, 2025 | Dec 23, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jan 07, 2026 | Jan 29, 2026 | 5.98% | $3.21 |
| EOG Resources (EOG) | Oct 17, 2025 | Oct 31, 2025 | 3.06% | $4.08 |
| ExxonMobil (XOM) | Nov 17, 2025 | Dec 10, 2025 | 3.64% | $3.96 |
| IBM (IBM) | Nov 12, 2025 | Dec 10, 2025 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jan 06, 2026 | Jan 29, 2026 | 3.43% | $6.00 |
| Kroger (KR) | Nov 17, 2025 | Dec 01, 2025 | 3.08% | $1.40 |
| Lockheed Martin (LMT) | Dec 02, 2025 | Dec 29, 2025 | 2.85% | $13.20 |
| PepsiCo (PEP) | Dec 09, 2025 | Jan 06, 2026 | 3.8% | $5.69 |
| Philip Morris (PM) | Dec 26, 2025 | Jan 13, 2026 | 6.06% | $5.88 |
| Qualcomm (QCOM) | Dec 08, 2025 | Dec 22, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Dec 17, 2025 | Jan 09, 2026 | 5.22% | $1.8 |
| Verizon (VZ) | Jan 12, 2026 | Feb 03, 2026 | 6.09% | $2.76 |
NameEX-Dividend DatePayment DateYield on Cost Annual DPS
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
