Parker Hannifin

Products that fly to the moon

Let's be honest, which of you knew the company Parker Hannifin and what they make? Despite the fact that I've been dealing with dividend stocks for over 8 years now, I had to ask Uncle Google about Parker Hannifin first. But that's exactly what DividendeOhneEnde is supposed to be about - getting to know new companies that make a first-class dividend investment.

The engineering company from Cleveland, Ohio, makes various hydraulic, pneumatic, and electromechanical components and systems that are urgently needed in a great many industries. Parker Hannifin is the world market leader in these segments - so it's no surprise that the first airplane to cross the Atlantic in 1927, and also Apollo 11 on the first crewed moon landing in 1969, were equipped with Parker products.

The history and business model of Parker Hannifin Corp.

Arthur L. Parker founded the Parker Appliance Company in Ohio in 1917. Back then he made novel pneumatic braking systems for cars and trains. When Parker was on his way to a trade show in 1919, his truck began to sway on an icy road. The trailer, with his entire inventory, plunged off a mountain cliff. He survived, but had to give up his company and look for a regular job again. Still, he was so convinced of his products that he saved the money he earned and 5 years later developed a hose fitting that could withstand high pressures.

Business went brilliantly, and the money earned was immediately invested in new products and better quality. To broaden its position in the market even further, Parker took over the company Hannifin, a maker of valve and cylinder products, in 1957. Afterwards, the name was changed to Parker Hannifin.

Today the conglomerate employs around 55,000 people in 50 countries. More than 900,000 different products are made in over 330 factories. That makes it one of the most profitable market leaders in motion and control technologies, hydraulics, pneumatics, process control, as well as climate control and filtration.

What else will happen at Parker Hannifin in the future?

That's actually a good question. The products are rather boring, and you shouldn't expect any excitement from the executive board either. But that's for the best - if you're looking for a solid investment for the future, you don't need any "hot trends" in your portfolio.
With its huge product portfolio, the company is broadly positioned across a great many industries - even if one industry weakens, the other segments make up for it. It's also very good that the products are in high demand, since machines wouldn't run without them.

And the dividend?

Parker Hannifin shareholders have received a share of the profits since 1951. Since 1957, the board has raised the dividend year after year. Not many companies have managed that over such a long period so far. Currently there's a yield of 1.9% - but dividend growth of around 13% over the last 10 years. With a payout of 34%, there's still plenty of room to bridge an economically weaker phase. Of course, this industrial company is a true Dividend King.

Conclusion:
Parker Hannifin develops urgently needed components for a wide variety of industries. That won't change in the future either - very much to the conglomerate's benefit. Considering the attractive dividend history, the growing demand, and the high profit margins, Parker Hannifin is a first-class investment.