Summary
The article discusses three top-performing stocks to consider investing in: Chevron, Honeywell International, and Home Depot. These companies are part of the Dow Jones Industrial Average (DJIA) and have shown resilience during downturns in energy prices, making them attractive for long-term investors.
Chevron is a high-yield dividend stock with a 5% forward dividend yield, having consistently increased its dividend for 38 consecutive years despite fluctuations in oil prices. The company’s robust operations throughout the energy value chain enable it to weather market volatility.
Honeywell International’s planned breakup into three separate companies could accelerate earnings growth through mergers and acquisitions. The new listings may attract investors seeking pure-play stocks in sustainable technologies, industrial automation, and aerospace.
Home Depot’s growth has slowed down due to high interest rates and mortgage rates causing consumers to delay home improvement projects. However, the company remains a solid source of passive income with a 2.5% dividend yield and an excellent business model that positions it for long-term economic growth.
Chevron – A Resilient Dividend Stock
Chevron is an oil supermajor with robust operations throughout the energy value chain. The company’s financial position remains strong despite fluctuations in energy prices, thanks to management’s efforts to ensure cost savings and reduce capital expenditures. The stock has only dipped 3.5% lower since the start of the year, while the price of oil benchmark West Texas Intermediate has dropped nearly 12%.
Chevron has consistently hiked its dividend higher for 38 consecutive years, rewarding shareholders and growing the business despite market volatility. Shares are currently attractively priced, trading at 7.9 times operating cash flow, a discount to their five-year average multiple of 8.4.
Honeywell’s Breakup – A Catalyst for Growth
Honeywell International is splitting into three separate companies: Solstice Advanced Materials, Honeywell Aerospace, and Honeywell Automation. The breakup should allow the respective management teams to better focus on generating value for investors while running their own capital allocation policies.
The new listings may attract investors seeking pure-play stocks in sustainable technologies, industrial automation, and aerospace. Honeywell’s management has shown a more aggressive approach to capital allocation under Vimul Kapur’s leadership, with recent acquisitions including the $4.95 billion purchase of Carrier Global Access Solutions (Automation) and the $1.8 billion deal to buy Johnson Matthey’s catalyst technology business.
Home Depot – A Coiled Spring for Long-Term Growth
Home Depot’s growth has slowed down due to high interest rates and mortgage rates causing consumers to delay home improvement projects. However, the company remains a solid source of passive income with a 2.5% dividend yield and an excellent business model that positions it for long-term economic growth.
The company has paid and raised its dividend every year since 2010, making it a reliable source of income for investors. Home Depot’s valuation is reasonable, trading at a 24.6 price-to-earnings ratio just slightly above its 10-year median of 22.9.
Conclusion
Chevron, Honeywell International, and Home Depot are top-performing stocks to consider investing in due to their resilience during downturns in energy prices and strong business models. Chevron’s high-yield dividend stock and robust operations throughout the energy value chain make it an attractive choice for long-term investors. Honeywell’s breakup could accelerate earnings growth through mergers and acquisitions, while Home Depot remains a solid source of passive income despite its current challenges.
Investors should consider these companies as part of their portfolio due to their potential to generate strong returns in the coming years.
