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The Likely Rise Of Electric Vehicles And The Impact On Metals

The take-up of electric vehicles (EVs) may well be in a growth pattern which could rival that of the price of bitcoin, but is unlikely, like the latter to push sales into bubble territory. As range anxiety and long charging times recede into obscurity with the enormous developments in battery technology, the environmental, and ultimately the cost, benefits of electric drive for automobiles over internal combustion engine (ICE)-driven small vehicles is likely to become paramount.

The potential exponential growth pattern for EV sales will have likely an enormous impact on the sales volume, and price, of the metals utilized in EV production. These are notably lithium, cobalt, manganese, nickel, graphite, and some rare earths in battery manufacture, copper (an electric vehicle utilizes far more copper than a conventional ICE-driven vehicle) and perhaps aluminum to keep body panel weight down – and maybe as a substitute for copper in electrical wiring systems. Conversely, the longer term future for platinum group metals, predominantly utilized in ICE engine exhaust cleaning catalysts may well be bleak, and we see a serious downturn for these commencing in the next decade – and getting worse from there.

We thus see several major keys necessary to stimulate the more general take-up of EVs, rather than plug-in hybrids (PHEVs). The first, and most important, is ever-improving battery technology, perhaps coupled with the expansion of a nationwide fast charging network to handle distance driving demand. Range anxiety will be countered by battery life improvements, while an interim solution could be the inclusion in EVs of small range extending ICEs designed primarily to charge the batteries rather than for driving the vehicles.

Up until the current year, there were few EVs on the market capable of achieving a range of much more than 100 miles, but this is changing now quite rapidly, although the 300-400 miles of range between charges, which is probably necessary to achieve true sales lift-off, is mainly only available at the high end of the price range. But every time a new model is announced, range tends to be one of the aspects which is being expanded. We would anticipate 250-350 mile range to be the norm, rather than the exception, even in many low-end EVs by the end of the current decade.

So, if one looks at the extremely rapid pattern of technological battery improvement in computers and in mobile phones, there has to be the likelihood that battery technology research will continue to raise vehicle range between charges, and reduce costs as a combination of technological advance and scale of production leads to savings here. No doubt rapid charging technology will also develop alongside, as will the installation of more and more charging points across the nation – this being the other main bugbear, along with vehicle cost, affecting EV take-up. Ultimately, we suspect that far greater ranges may become the norm – maybe even 1,000 miles on a single charge before too long, certainly for high end vehicles.

This would likely be a nail in the coffin of the internal combustion engine (ICE) as would likely increasing legislation to ban ICE-driven vehicles from urban areas which we are already seeing in some major cities around the world as urban administrations in particular do battle with air pollution, to which gas and diesel driven vehicles are a major contributor. Indeed some nations are already looking to ban sales of ICE-driven vehicles. Norway, for example, is proposing to ban all fossil-fuelled cars from its roads. As the UK’s Guardian newspaper reports, Norway already has the highest per capita number of all-electric [battery only] cars in the world: more than 100,000 in a country of 5.2 million people. In 2016, EVs constituted nearly 40% of the nation’s newly registered passenger cars. And the Norwegian experiment shows every sign of accelerating. Earlier this year, Norway opened the world’s largest fast-charging station, which can charge up to 28 vehicles in about half an hour. The country, joined by Europe’s No. 2 in electromobility, the Netherlands, intends to phase out all fossil fuel-powered automobiles by 2025.

New types of battery technology may also be a factor here. At the moment most, if not all, EVs run on lithium-ion technology, but research is under way into so-called solid-state batteries which offer (in theory at least) lighter weights, longer ranges, shorter charging times, and lower costs than current standard lithium-ion batteries. But so far, the technology has not been able to be transferred from the laboratory to the kind of size necessary to drive a full-size EV efficiently. Even with lithium-ion technology, though, Elon Musk’s Tesla (NASDAQ:TSLA) – perhaps the principal driver in the advance of EV design and implementation – is achieving a claimed 600 mile range between charges in some of its latest, currently available high-end vehicles – and is already on the way to achieving this on its ‘affordable’ Model 3 range.

Tesla has also announced an all-electric semi truck which appears expensive in relation to diesel driven trucks but claims a 2-year cost payback, given how much cheaper it is to run an all-electric vehicle than an ICE-powered one, and performance and range figures are impressive. Tesla also claims driver environment and substantial safety benefits for its semis. PepsiCo (NYSE:PEP) has already ordered 100 of these and expects to start taking delivery by 2019/20.

Other manufacturers are also planning to produce and sell all-electric trucks by the end of the current decade – Reuters reports that Navistar International Corp. (NYSE:NAV) and Volkswagen AG’s (OTCPK:VLKAF) Truck and Bus are working together to launch an electric medium duty truck by late 2019, while rival Daimler AG (OTCPK:DDAIF) has delivered the first of a smaller range of electric trucks to customers in New York. These are designed for shorter ranges than the Tesla semi but will likely see expanded ranges as battery technology advances.

Re the solid state battery, in the UK, Sir James Dyson, of vacuum cleaner fame, is working to develop a Dyson EV by 2020 and is reportedly putting 拢2.5 billion towards its development. Dyson is also reportedly nailing his colors to the solid-state battery mast, although again whether a solid state battery sufficient to power an EV will be available in that timescale remains to be seen!

Japanese mainstream auto manufacturer Toyota (NYSE:TM) also reckons to be working on a solid-state battery-driven EV which it hopes to have on the market in the early 2020s. Undoubtedly, other mainstream manufacturers, virtually all of whom are working on EV design and production, will also be looking at the potential of solid state batteries because if they can be produced commercially will, eventually, offer the range, rapid charging and lower costs required to make EVs the norm rather than the exception.

With the kinds of technology growth patterns we have been seeing, we would anticipate total EV dominance of the automobile market far faster than recent projections might suggest – perhaps within 20 years. Already Volvo (OTCPK:VOLAF) has announced that every new car it launches from 2019 will have an electric motor (this will include hybrids so is not phasing out the ICE totally – yet – but is an indicator of the way the market is trending).

While battery technology/range is perhaps the most important factor for EV manufacture and sales going forward, cost is another hugely important factor. Despite the apparent drive-train simplicity of electric-powered vehicles, those on the market at the moment are much more costly than similar-sized conventional vehicles, and only attractive through the availability of government subsidies. Insurance costs are higher too.

But there are some other key advantages of electrically driven vehicles which will be major sales points assuming battery technology factors can be overcome – which they will be. Rapid torque availability – which means very fast acceleration – the far easier integration with new computer technology, potentially far lower running costs and the convenience of home charging, for those with that possibility, or with easy access to overnight charging points, rather than having to fill up at a gas station are all key points. But most of all the perceived environmental benefits of electric drive over ICE-driven vehicles are becoming paramount.

The capital and maintenance costs for EVs are likely to come down as take-up increases, but it may take time, and the continuation of subsidies until the market has truly taken off is probably key for any serious short-term growth momentum

Model Availability

Suffice it to say that the numbers of EVs available to the market will be increasing exponentially over the next few years with most mainstream manufacturers offering all-electric models already. However, one does have to credit Elon Musk’s Tesla company with bringing EVs into mainstream thought with its spectacular high end Model S and Model X EVs, offering a degree of luxury and incredible performance only previously seen in high-end supercars. And now, Musk’s company is in the throes of bringing his production vehicles into the ‘affordable’ category – if $35,000 plus is seen as ‘affordable’. Pre-orders for the Tesla Model 3 are such that, provided it can meet its production targets, without going bust first, would make Tesla one of the world’s largest automakers.

Musk is a visionary and is not stopping there and has just shown the all-electric-powered truck (mentioned above), and the ‘Insane’ Tesla Roadster capable of 0-60 mph in 1.9 seconds and with a claimed 620 mile range, but many think Musk’s company is hugely overstretched and will crash and burn under its huge debt burden.

But it is probably Musk’s amazing vision and drive which has stimulated the EV sector into action. Whether Tesla will survive, or will be overtaken by mostly mainstream auto manufacturers, who now have been dragged into the realization that EVs are almost certainly the future, remains to be seen. The mainstream manufacturers are battling to cut into Tesla’s undoubted lead in the sector and are already coming out with possible Tesla killers – like the Chevy Bolt which offers similar pricing and performance to the Tesla Model 3 – but somehow lacks its kerb appeal.

Metals Demand

The global automobile market is enormous and a switch to EVs could have a huge impact. Below is a barchart from Visual Capitalist based on the change in metals demand with a 100% take-up of all-electric battery driven cars but only based on the battery technology used in the Chevy Bolt – GM’s (NYSE:GM) direct competitor with the Tesla Model 3, which uses a different battery make-up – and would be very different still once solid state batteries have come into use. However, it is valuable in demonstrating some of the likely beneficiary metals in a switch to EVs.

Naturally, lithium tops the bill, but here, there is plenty of future production coming on stream to meet demand so a lithium play may not be as beneficial as it would seem from the chart. It is perhaps some of the other metals where supply may not be able to keep up with demand and prices may rocket, but because these metals are often produced as byproducts, securing an investment that may take off accordingly may be more difficult to do.

Of the primary metals, the biggest beneficiaries could be copper, nickel, and aluminum – the former because the average EV uses around twice as much copper as existing ICE-driven vehicles, nickel, and aluminum are both used in some battery technologies in a big way, while the latter will almost certainly get increasing use in body panels to keep vehicle weights down. Of the byproduct metals cobalt has obviously the most potential as do the rare earths – specifically dysprosium which is utilized in some electric drive technologies.

London quoted Glencore [LSE: GLEN] is comfortably the world’s biggest cobalt producer, but cobalt only represents a small part of the company’s product mix, but nickel is important too. An ADR is available to U.S. Investors: Glencore ADR (OTCPK:GLNCY). Canada’s Sherritt International [TSX: S] which will also benefit as a major nickel producer could be of interest and again is available on the OTC market in the U.S. – Sherritt International (OTCPK:SHERF). Another major cobalt miner with a U.S. ADR quote is Brazil’s Vale (NYSE:VALE) but, like Glencore, is one of the world’s largest diversified miners, and cobalt represents a fairly small part of its overall revenues – but Vale is also the world’s second largest nickel producer after Russia’s Norilsk (OTCPK:NILSY).

Dysprosium is the rare earths wild card, but there is little or no significant production outside China, although Australia’s Northern Minerals [ASX: NTU] has brought is Browns Range mine into production and reckons to be the world’s next significant dysprosium producer outside China. But its mining operation, high in heavy rare earths of which dysprosium is particularly significant, is only at pilot plant construction stage at the moment.

Graphite, which may be the other major beneficiary ‘metal’, is primarily produced in China, India, Brazil, Turkey, and North Korea. Graphite investment options in North America are largely restricted to the risky junior sector, and none are full board quoted. There have been articles on Seeking Alpha about these, but for the moment, this writer is steering clear. The junior sector seems just too speculative. Rather look to the major stocks which may benefit as the downsides are much more limited.

Of the major metals, copper appears to be the likely major beneficiary of significant growth in the EV sector, while maintaining significant demand in the ICE-driven vehicle sector. The world’s biggest producer remains the Chilean state-owned Codelco, but the remaining big producers apart from the U.S. company, Freeport McMoran (NYSE:FCX) are mostly the big diversified miners. Glencore and Vale, both mentioned above as major nickel and cobalt miners, are among these as are BHP Billiton (BHP) and Rio Tinto (RIO), the world’s two biggest diversified miners. Both these are headquartered elsewhere – BHP’s joint HQ are in the UK and Australia, and Rio Tinto in the UK. Once again, because these are such big diversified mining companies, demand growth in a particular sector like copper may be less significant yet still give a useful boost to earnings.

The same applies to aluminum. Alcoa (NYSE:AA) is the biggest North American producer, but any impact due to growth in the automobile production sector won’t have a particularly significant impact overall as it will only represent a tiny portion of overall demand.

While this article primarily looks at the likely growth potential for EVs and some of the likely long term beneficiaries (virtually, none of the anticipated gains in the major sector are likely to eventuate until the next decade), one should also take a look at the eventual losers. The most notable is the market for platinum, palladium, and rhodium, all of which have their primary usage in ICE exhaust emission control catalytic technology. Here again, the problems are likely to appear long term – not short term where global recovery may still lead to some good gains – particularly if precious metals’ prices (driven by gold) rise. We would expect the platinum and palladium prices to rebalance in favor of platinum, given the change in the pricing differential is likely to result in a switch to platinum catalysts in at least a part of the gasoline ICE exhaust control market.

The current high palladium price of over $1,000 an ounce does not seem yet to have impacted stocks like Sibanye-Stillwater (SBGL). While the company is also expanding its platinum exposure through the just-announced purchase of Lonmin, it is not really being given the credit for its palladium exposure through Stillwater, and also in South Africa, where the majority of its production is based. Its holdings there are predominantly in mines producing primarily from the platinum richer Merensky reef, but it has the capability to add to its production on the UG2 reef which has a marginally higher palladium and rhodium content. But overall, both Stillwater and the South African producers are at best marginal operations at current pgm prices, although the higher palladium and rhodium prices may be slightly improving the economics.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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U.S. Concrete – Financially And Geographically Positioned For Growth

U.S. Concrete (USCR) is situated in the top position of each major market where they supply Ready-Mix and Aggregate concrete supplies. USCR currently services the fastest growing residential, commercial, and infrastructural real estate markets in the U.S. They provide their patented quick drying and eco-friendly mix of concrete to markets such as New York City, Dallas-Fort Worth, and the San Francisco Bay area. U.S. Concrete has agreed to contracts with high-margin commercial companies such as Google (NASDAQ:GOOG), FaceBook (NASDAQ:FB), and Toyota (NYSE:TM), as well as LaGuardia International Airport. Their current strategy of organic and acquisition growth, combined with their high-profile project outlay, shows that USCR has positioned itself for major growth as 2018 approaches. Using my pro forma valuation, the one-year price target is just under $105.

Recent Earnings Performance

U.S. Concrete currently sits slightly above the trends of the Construction Materials and Products Sector Index. However, that does not tell the whole story. I am not suggesting that readers buy the index; rather, I’m suggesting a buy that, within the year, will outperform the index significantly. Despite a dip in Q3 performance due to two major acquisitions, inclement weather, and the effects of three major Hurricanes, USCR was able to increase consolidated revenue 7.9% year over year, to $354.6M. Total revenue increased 18% to $1.313B, and the total adjusted EBITDA increased 1.3% to $54.7M.

The reason behind USCR’s success is the position they hold in the fastest growing commercial, residential and industrial real estate markets in the country. USCR has agreed to be the top supplier to commercial projects with high margins, such as Facebook Data Center in Fort Worth, LaGuardia Airport in Queens, and Google’s Bayview Campus in Mountain View, Calif. Due to these contracts and the positive outlook the industrial sector has seen under the Trump administration, there is an extremely positive attitude for current and future revenue and margin growth.

Industry Outlook

U.S. Concrete is well positioned in the construction products industry because of the markets that they currently serve. USCR is an industry-leading ready-mixed concrete and aggregate supplier in the New York metropolitan, Dallas Fort Worth, and San Francisco markets. These three metropolitan areas are some of the fastest growing industrial and residential areas in the country. Due to USCR’s specific regional dominance, they have a large competitive advantage in their industry.

Additionally, USCR has the ability to provide a superior ready-mixed concrete that uses their EF and Aridus Technology to allow a stronger, quicker drying, and eco-friendly product. Because USCR offers a superior product than its competitors, they have the ability to sell their ready-mixed concrete at a premium price of $136.62 per cubic yard vs. the industry average of $107.17.

Source: USCR Investor Presentation Slides

U.S. Concrete has utilized vertical integration approach in order to increase their margins and return on capital. Although they are second to Vulcan Materials (VMC) in aggregate ownership, USCR’s recent acquisitions have allowed them to increase their internal aggregate sourcing, helping to reduce costs and improve margins.

Segment Analysis

U.S. Concrete focuses on two key segments, Ready-Mix Concrete and Aggregate supplies. USCR’s Ready-Mix segment has seen its 26th straight quarter of year over year growth, and its backlog has grown 7.7% since the beginning of 2017. The outlook for Ready-Mix is extremely positive considering that the construction spending is estimated to outpace the national average for the next 18 months in San Francisco, Dallas-Ft. Worth, and the five boroughs of New York. Compared to 2016 the Ready-Mix sales volume has grown 13.9% to 8.91 million cubic yards. The Ready-Mix segment should see continued growth due to their market position in the New York Metro area that has just passed a $32 billion budget to increase infrastructure spending that highlights U.S. Concrete as the main Ready-Mix supplier.

Currently, USCR is the main supplier for World Trade Center Construction (400,000 cubic yards), Hudson Yards (375,000 cubic yards), LaGuardia Airport (375,000 cubic yards), the Goethals Bridge (80,000 cubic yards), the Tappan Zee Bridge (~45,000 cubic yards), and the Bayonne Bridge (40,000 cubic yards). The Aggregate segment took a bit of a dip in 2017 due to the inclement weather and three major hurricanes that shut down a quarry. It was expected that sales volume would decrease, and it did by 5.8% in quarter three. However, the rise in Aggregate price by 2.7% to $12.25 somewhat offset the dip in sales. Overall, the year over year revenue increased 18% to $1.313B despite the shortcomings in Aggregates.

Acquisition Growth

U.S. Concrete is constantly looking for ways to expand their robust plant layout. They are no strangers to acquisitions, and have recently locked in a deal with Polaris Materials located in British Columbia to be approved on Nov. 15th. USCR also acquired Action Supply located in Philadelphia, which has the potential to infiltrate a new market, but really offers the ability to synergize their recently acquired Corbett Aggregates Companies in New Jersey.

The main focus for their acquisitions are companies that produce Aggregates. Aggregates provide roughly 6.5% of revenue, but allow USCR to vertically integrate their internal production. The ability to vertically integrate allows USCR to reduce costs by limiting the need to purchase from the open market. USCR currently sources roughly 1/3 of their Aggregates internally, but the acquisition of Polaris is estimated to increase their Aggregate production significantly. Estimates project the ability to produce nearly double the amount of internal Aggregate sourcing.

CEO Bill Sandbrook said that the Polaris deal will provide the company with more Aggregate reserves that will help the company’s strategic operations in northern California markets. Additionally, Polaris currently operates in Long Beach, Calif., which could potentially allow U.S. Concrete to expand into the Los Angles market. USCR is able to finance their acquisitions through long-term debt. The book value of long-term debt is $688.4M, and $610.3M is due in 2024. However, due to the organic acquisitions, the steady increase in revenues and the limitation of costs, long-term debt is not a significant liability.

Competitors

Although U.S. Concrete might be small in regard to market capitalization when compared to its competitors, they make up for it in the contracts that they have with large commercial companies, as well as the markets in which they operate. USCR significantly beats their competitors in return on equity and return on assets, due to their contracts with high margin companies. Their adjusted EBITDA is steadily growing, but is limited due to their acquisition costs that they finance in part by revenue (the majority is long-term debt). Considering USCR’s market capitalization is much smaller than its nearest competitor, their EBITDA is comparable to the median in terms of size.

Source: Bloomberg

USCR’s gross margin is slightly below the median, however this should rise as the budget for spending in the New York Metro area has been set at $32B over the next 10 years. Most importantly, USCR’s revenue is slightly below the median; however, it is greater than Ash Grove Cement Co., and is slightly trailing Summit Materials (SUM). Both of these competitors are nearly three times the size of USCR, but generate comparable revenues. It is important to consider the types of projects that USCR is undertaking as well as the projects in their backlog.

Risks

Along with it’s competitors, USCR is concerned with the volatility of oil prices as well as the uncertainty of Trump’s $1 trillion infrastructure spending executive order. USCR is also faced with paying off short-term liabilities that might put a stress on their cash on hand. However, with their recent acquisition and revenue growth, there shouldn’t be an overexaggerated concern here.

Conclusion

USCR is well-positioned in their primary markets of New York Metro, Dallas-Fort Worth, and San Francisco Bay. USCR has constantly managed to grow its revenue and number of high margin projects because of their organic and acquisition growth strategy. USCR will continue to benefit from an increase in infrastructure spending while decreasing their costs by improving vertical integration. They have industry-leading return on assets and return on equity, although they have the smallest capital expenditure compared to competitors. I believe that a one-year target return of 22% is extremely achievable for USCR.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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3 Best Dividend Stocks for Retirees with 3%-Plus Yields

Finding reliable retirement income is harder than ever thanks to the Federal Reserve’s rock-bottom interest rates, but we have three of the best dividend stocks for retirees to help you boost your income…

The historical federal funds rate has usually stayed between 2% and 5% but we’ve been between 0.5% and 1.25% for the past nine years.

And with stocks trading at all-time highs, even decent dividend income is hard to come by.

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According to Multpl.com, the average dividend yield of the S&P 500 is currently 1.86%. Compared to the S&P’s average historical yield of 4.37%, it seems like the only people receiving meaningful dividend income are the ones who can afford tens of thousands of shares.

But that doesn’t have to be the case…

For those investors who already have a retirement plan in place and still have extra money to invest, Money Morning has a strategy to supplement your main retirement income.

Each of these dividend stocks boasts a 3% dividend yield or better.

But we want to be clear: This is not a replacement for a retirement plan. It’s simply a way to boost your income on top of what you’re already collecting. And these stocks should only be bought with the extra money you have.

And these stocks are more than income investments; they also fit Money Morning Chief Investment Strategist Keith Fitz-Gerald’s “Unstoppable Trends.” These companies operate in sectors that maintain steady demand regardless which way the market goes…

“Unstoppable Trends” Lead to Growing Dividend Income

The key to dividend income investing is finding companies that fall into one of what Fitz-Gerald calls the six “Unstoppable Trends.” These trends are backed by trillions of dollars that Washington cannot repeal, the Fed cannot meddle with, and Wall Street cannot hijack. They are:

Demographics Scarcity and allocation Medicine Energy Technology War, terrorism, and ugliness (also called “defense”)

Investing in companies that are tapped into these trends is the surest way to secure reliable dividend income

Our first dividend stock is plugged into an industry projected to grow 51% annually, to $57.6 billion by 2021: artificial intelligence (AI).

Best Dividend Stocks for Retirees No. 3: Toyota Motor Corp. (NYSE: TM)

The world’s largest automaker, Toyota Motor Corp. (NYSE: TM), sports a 3.2% dividend yield.

The company has paid a dividend since 1993 and increased its payments almost every year except for a 50% cut following the Great Recession of 2008. Currently, the company’s annual dividend payment is at an all-time high of $1.97.

Toyota’s dividend is secured by revenue from the more than 70 million vehicles sold over the past nine years, including more than 30 million in the United States.

This “Secret” Helped Transform Two Teachers into Millionaires: Donna and Dave R. were both teachers in Boston. But today, they’re retired millionaires who are also earning $10,000 a month in income. Their secret? Much of their wealth is due to a Great Depression-era “program” most have no idea exists. Learn more…

Fitz-Gerald likes Toyota because it’s also one of the leading innovators in the auto industry…

Its Prius became the standard against which all hybrid car technology is measured. The car became the world’s bestselling hybrid, with more than 6.1 million vehicles sold globally.

Not to be outdone by the U.S. tech giants, in November 2015, Toyota declared it would invest $1 billion through 2020 to research AI. This year, that initiative materialized in a July announcement that the company would invest $100 million into its venture capital arm seeking out companies working on driverless AI technology.

The company is likely to continue growing its dividend as it dominates in auto sales and continues reimagining the technology driving its profits.

With a dividend payout ratio of less than 35% I expect Toyota to reliably pay its generous dividend for many years to come.

Best Dividend Stocks for Retirees No. 2: ABB Ltd. (NYSE: ABB)

Switzerland-based ABB Ltd. (NYSE: ABB), specializes in power-grid construction, automation, and robotics technology.

Since bottoming out at $16 in January 2016, shares of ABB, which yield 3%, have climbed to $25.50, a 59.4% increase.

The company bounced back last year after picking up two major contracts that would bolster its power-grid infrastructure business, one of its main sources of revenue.

According to a report by PwC and Oxford Economics, infrastructure spending – like on power grids – will reach $9 trillion per year by 2025, more than double the $4 trillion spent in 2012.

But that’s not all…

Fitz-Gerald says the company is billing itself as a “technology leader” rather than an infrastructure supplier – an important distinction.

“Not many investors realize this, but more than 55% of ABB’s sales are already from software and digitally enabled devices,” he added.

As industries increasingly embrace digitalization, ABB’s software and digitally enabled products represent a major growth opportunity.

The biggest example of this is in developing economies, like in Asia. Since many firms in developing countries found the cost of automation to be prohibitively expensive, they couldn’t afford to buy ABB’s products. However, thanks to lower-cost products like YuMi – the company’s $40,000 two-arm factory robot – companies in developing markets could afford to start buying ABB’s products.

As a result, analysts are forecasting earnings per share (EPS) for 2018 to come in at $1.45, up 5.07% from a week earlier. And 17.9% higher than current-year EPS expectations of $1.23.

ABB has paid its dividend every year since 2005, and staying on the forefront of technological innovation will help the company keep paying its dividend.

And there’s a dividend stock on this list with an even higher yield…

Best Dividend Stocks for Retirees No. 1: Sanofi (NYSE: SNY)

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