Investing in companies that sell the behind-the-scenes machines of the U.S. economy, such as elevators and turbines, is the best way for dividend-hungry investors to sate their appetite.
The industrials sector of the stock market has added more dividend-paying companies in the past 11 years than any other sector, including dividend stalwarts energy and health care, according to FactSet Dividend Quarterly. In the last quarter of 2013 alone, 45 industrial companies raised their dividends.
There's a straightforward reason: Dividends in the industrial sector rise alongside U.S. industrial production. Industrial production remains below its long-term rate (1972–2013), but it has increased year over year, according to Federal Reserve data. Factory production showed its biggest gain in four years this past February, and in March, manufacturing capacity hit its highest level since June 2008, Fed data shows.
"Favor companies that will benefit from the North American manufacturing renaissance," said Brian Belski, chief investment strategist at BMO Capital Markets.