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3 Long-Term Picks That Look Great Despite Iffy Yields

Not all retirement buys have to be stodgy, income-only plays

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W.W. Grainger

GraingerDividend Yield: 1.4%
5-Year Average Dividend Increase: 18%

I have a soft spot in my heart for W.W. Grainger (GWW) — the unsexy distributor of maintenance and repair supplies —  and I’ve written about the company on several occasions. The company boasts a solid business model, profits and revenues that have improved for four consecutive years, and decades of increased payouts.

The company is off to a solid start in 2013, with first-quarter earnings up 14% year-over-year on revenues that improved by 4% to just under $3 billion. Grainger also provided analysts with guidance better than they expected — GWW thinks it’ll pull in $11.30 to $12 for the fiscal year, with the high end ahead of estimates of $11.94. Cash flow of $210 million doesn’t sound like much, but it more than covers GWW’s $56 million in dividend payments — plus Grainger has another $485 million in the bank.

GWW shares reflect the company’s financial results, up 27% year-to-date. Perhaps my only criticism is that Grainger isn’t cheap at nearly 25 times earnings, but I’d certainly consider buying if the market turned and dragged GWW down a bit with it.

Marc Bastow is an Assistant Editor at As of this writing, he was long DIS.

Article printed from InvestorPlace Media,

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