Best Industrial Stocks Of January 2024 (2024)

Best Industrial Stocks of January 2024

Boeing (BA)

Market Cap

$148 billion

Dividend Yield

n/a

10-Year Avg. Annualized Return

7.6%

$148 billion

n/a

7.6%

Why We Picked It

Chicago-based Boeing is the world’s largest maker of aerospace products—chances are, your last plane ride was on a Boeing jet airliner. BA is also one of the biggest U.S. government defense contractors, making fighter jets, helicopters, rockets, aircrew training systems and even Air Force One.

Union Pacific Corp. (UNP)

Market Cap

$147 billion

Dividend Yield

2.2%

10-Year Avg. Annualized Return

13.7%

$147 billion

2.2%

13.7%

Why We Picked It

Union Pacific, founded in 1862, is among the oldest and largest publicly owned railroads on earth. The history of this iconic company describes the growth and changes of the entire U.S. economy over the last century and a half.

Today, Union Pacific is primarily a freight hauler, headquartered in Omaha and operating in 23 states spanning the western half of the United States. Business has clearly been good as Union Pacific’s stock price has more than doubled over the past five years.

Caterpillar Inc. (CAT)

Market Cap

$145 billion

Dividend Yield

1.8%

10-Year Avg. Annualized Return

15.4%

$145 billion

1.8%

Siemens AG (SIEGY)

Market Cap

$139 billion

Dividend Yield

2.6%

10-Year Avg. Annualized Return

7.0%

$139 billion

2.6%

7.0%

Why We Picked It

Siemens AG is a 170-year-old multinational conglomerate headquartered in Munich, Germany. The company is the world’s largest supplier of sustainable power technology, chiefly thanks to its wind power division. Its other major businesses concentrate on technological applications and hardware in healthcare, finance, construction and automation.

Siemens generated annual revenue of $78 billion in 2022 a 4.8% increase from $74.4 billion in 2021. The company’s earnings for 2022 amounted to $2.49, a 45.16% decline from 2021. For the income-minded investor, Siemens also offers a healthy dividend.

General Electric (GE)

Market Cap

$135 billion

Dividend Yield

0.3%

10-Year Avg. Annualized Return

-0.5%

$135 billion

0.3%

-0.5%

Why We Picked It

General Electric has a long and storied history dating back to Thomas Edison’s local power generating companies, initially started in 1889. The company first emerged under its present name from a consolidation of several electric companies arranged by financier J.P. Morgan.

GE was at one time the largest company in the world. It remains one of the largest U.S. industrial stocks, but today GE is a shadow of its former self. In November 2021, the company said it would spin off its health care division in early 2023 and its energy businesses in 2024, leaving aviation as its remaining business.

Honeywell International Inc. (HON)

Market Cap

$135 billion

Dividend Yield

2.1%

10-Year Avg. Annualized Return

11.3%

$135 billion

2.1%

11.3%

Why We Picked It

Honeywell is a diversified manufacturer of everything from HVAC equipment to aerospace products to networking and security technology. The roots of this manufacturing giant go back to the late 19th century, although the present conglomerate has been formed by multiple mega-merges throughout the 20th century.

HON’s technology was instrumental in the first moon landing in 1969. Today, the company has made a big push in the personal protective equipment (PPE) space in response to the Covid-19 pandemic. Honeywell has a strong history of paying dividends and recently posted its 12th consecutive dividend increase.

United Parcel Service Inc. (UPS)

Market Cap

$134 billion

Dividend Yield

4.1%

10-Year Avg. Annualized Return

7.6%

$134 billion

4.1%

7.6%

Why We Picked It

In the world of transportation and logistics, there’s nothing quite as iconic as those big brown UPS delivery trucks. Founded in Seattle in 1907, today the company is headquartered in Atlanta. In 1975, UPS became the first package delivery company to serve every address in the continental U.S.

Interestingly enough, UPS was a private company for most of the 20th century, and it only went public in late 1999. Online shopping and e-commerce has vastly benefited UPS while the Covid-19 pandemic helped supercharge its business now that Americans have realized that virtually anything can be delivered to their doorstep.

Raytheon Technologies (RTX)

Market Cap

$123 billion

Dividend Yield

2.8%

10-Year Avg. Annualized Return

5.3%

$123 billion

2.8%

5.3%

Why We Picked It

Raytheon Technologies is a giant of the U.S. aerospace and defense industry. Formed in 2020 by a merger of Raytheon Company and United Technologies, RTX makes missiles, aircraft engines, satellites and radar systems, spending billions of dollars a year on research and development. Raytheon was one of the original tech startups, begun by two engineering students at Tufts University in 1922.

Today, Raytheon is a top choice for investors who want to get exposure to the defense industry in their portfolios. Income-minded investors might appreciate the reliability of RTX, which has paid out cash dividends every year since 1936, making it one of the best dividend aristocrats.

Airbus SE (EADSF)

Market Cap

$121 billion

Dividend Yield

1.3%

10-Year Avg. Annualized Return

8.1%

$121 billion

1.3%

8.1%

Why We Picked It

Aerospace manufacturer, Airbus SE operates through three primary segments: Airbus, Airbus helicopters and Airbus defense and space. Through these segments, the company designs, manufactures and delivers aircraft for the commercial, freight and military markets.

Airbus was incorporated in 1998 as Airbus Group SE, changing its name simply to Airbus SE in 2017. The company is headquartered in Leiden, the Netherlands. EADSF trades as an American depository receipt (ADR) in the U.S. over-the-counter (OTC) market.

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Lockheed Martin (LMT)

Market Cap

$114 billion

Dividend Yield

2.7%

10-Year Avg. Annualized Return

15.2%

$114 billion

2.7%

15.2%

Why We Picked It

Lockheed Martin Corp is one of the largest global aerospace and defense companies. The company was formed in 1995 through the merger of Lockheed Corporation and Martin Marietta, two of the pioneering firms of the U.S. aviation industry.

An overwhelming percentage of LMT’s annual revenue comes from contracts with the U.S. government and foreign governments. The company generated $66 billion in total revenue in 2022, down slightly from $67 billion in 2021. Net earnings in 2022 were $5.7 billion—$21.66 per share—compared to $6.3 billion, or $22.76 per share, in 2021.

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*All data is sourced from StockRover, current as of January 4, 2024.

Types of Industrial Stocks

Like other stock market sectors, industrial stocks can be divided into several sub industries. Here are the four main industrial sub-sectors:

Capital goods. Companies that manufacture heavy machinery are what most people probably think about when they think about industrial stocks. These so-called capital goods companies build the equipment used in the production of other goods, such as tooling and fabrication equipment, presses and boilers.
Aerospace and defense. Companies that build aircraft or manufacture weapons systems and related products for national governments are among the biggest industrial stocks. This sub industry also includes companies that make rockets and other hardware for space exploration.
Transportation and logistics. It may seem a bit counterintuitive, but logistics and transportation companies are among the biggest industrial stocks. Airlines, railroads, trucking firms and parcel delivery firms specialize in moving people and goods all over the world.
Construction equipment and building supplies. Industrial companies produce the products and machinery that are used to create our built environment. Whether they’re helping customers build single-family homes or skyscrapers, roads or bridges, construction companies fall under this subcategory of industrial stocks.

Advantages of Investing in Industrial Stocks

Strong returns when the economy is heating up. Industrial stocks are the classic example of a cyclical stock. When the economy is booming, orders for industrial companies surge higher.

Large, well-established companies. Industrial stocks rank among some of the oldest public companies. Many industrial stocks have been around for decades, with a long track record of performance that lets investors see how they perform in all sorts of different economic conditions. In addition, since industrial stocks benefit from economies of scale, they tend to be large, diversified companies.

Regular dividends. Industrial stocks often pay dividends, some of which have been maintained and increased over the very long term. Approximately 18% of the dividend aristocrats are industrial stocks, for instance.

Risks of Investing in Industrial Stocks

While industrial stocks have many advantages, they’re not without drawbacks. Here are a few risks to consider before you invest:

Underperformance when the economy is weakening. This is the flip side of being a great investment choice when the economy is booming. Orders for industrial firms rapidly decline when economic activity cools off and heads into recession, taking industrial stocks lower.
Supply chain challenges. The products and services of industrial companies are highly dependent on sprawling supply chains. In the case of transportation and logistics companies, they may literally be the supply chain. As the Covid-19 pandemic has shown, manufacturing industries can be crippled by supply chain breakdowns.
Unpredictable dividend yields. While some notable industrial stocks support robust, growing dividends, most industrial dividends are tied to the ups and downs of the economy, just like share value.

How to Buy Industrial Stocks

You can buy industrial stocks in a taxable brokerage account or a tax-advantaged individual retirement account (IRA). If you need help finding the right account type for you, check out our list of the best online brokers and the best investment apps.

Investing in individual stocks isn’t like buying a mutual fund or an index fund. When buying individual stocks, you need to research companies and assess their risks. Individual stocks can be much more volatile than diversified funds, and you need to be aware of these risks before you buy.

Read More: How To Buy Stocks

That’s why instead of advocating people invest in any one stock, many financial advisors recommend that investors diversify their holdings using investments like exchange-traded funds (ETFs) or index funds. Look over Forbes Advisor’s list of best total stock market index funds or use fund screening tools available on your investing platform to find the best options for you.

The author held no positions in the securities discussed in the post at the original time of publication.

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Now, let's delve into the information provided in the article "Best Industrial Stocks of January 2024" and break down the key concepts:

Boeing (BA)
- Market Cap: $148 billion
- Dividend Yield: n/a
- 10-Year Avg. Annualized Return: 7.6%
- Why We Picked It: Boeing, based in Chicago, is the world’s largest maker of aerospace products and a major U.S. government defense contractor. It manufactures jet airliners, fighter jets, helicopters, rockets, aircrew training systems, and Air Force One.
Union Pacific Corp. (UNP)
- Market Cap: $147 billion
- Dividend Yield: 2.2%
- 10-Year Avg. Annualized Return: 13.7%
- Why We Picked It: Union Pacific, founded in 1862, is one of the oldest and largest publicly owned railroads globally. It operates as a freight hauler, covering 23 states in the western half of the United States.
Caterpillar Inc. (CAT)
- Market Cap: $145 billion
- Dividend Yield: 1.8%
- 10-Year Avg. Annualized Return: 15.4%
- Why We Picked It: Caterpillar, headquartered in Chicago, is the world’s largest manufacturer of construction equipment. It also produces equipment for mining, generators, engines, and turbines, benefiting from economic expansions and public infrastructure projects.
Siemens AG (SIEGY)
- Market Cap: $139 billion
- Dividend Yield: 2.6%
- 10-Year Avg. Annualized Return: 7.0%
- Why We Picked It: Siemens AG, a 170-year-old multinational conglomerate based in Munich, Germany, is the largest supplier of sustainable power technology. It operates in various industries, including wind power, healthcare, finance, construction, and automation.
General Electric (GE)
- Market Cap: $135 billion
- Dividend Yield: 0.3%
- 10-Year Avg. Annualized Return: -0.5%
- Why We Picked It: General Electric, with a long history dating back to 1889, is a major U.S. industrial stock. It is undergoing restructuring, having spun off its health care division in 2023 and planning to spin off its energy businesses in 2024, focusing on aviation.
Honeywell International Inc. (HON)
- Market Cap: $135 billion
- Dividend Yield: 2.1%
- 10-Year Avg. Annualized Return: 11.3%
- Why We Picked It: Honeywell is a diversified manufacturer with a history dating back to the late 19th century. It produces HVAC equipment, aerospace products, networking, and security technology. The company has a strong dividend history and a recent focus on personal protective equipment (PPE).
United Parcel Service Inc. (UPS)
- Market Cap: $134 billion
- Dividend Yield: 4.1%
- 10-Year Avg. Annualized Return: 7.6%
- Why We Picked It: UPS, founded in 1907 and headquartered in Atlanta, is a prominent player in transportation and logistics. It became a public company in 1999 and has benefited from the growth of online shopping, particularly during the Covid-19 pandemic.
Raytheon Technologies (RTX)
- Market Cap: $123 billion
- Dividend Yield: 2.8%
- 10-Year Avg. Annualized Return: 5.3%
- Why We Picked It: Raytheon Technologies, formed in 2020 through a merger, is a major player in the U.S. aerospace and defense industry. It produces missiles, aircraft engines, satellites, and radar systems, making it a reliable choice for investors seeking exposure to the defense sector.
Airbus SE (EADSF)
- Market Cap: $121 billion
- Dividend Yield: 1.3%
- 10-Year Avg. Annualized Return: 8.1%
- Why We Picked It: Airbus SE is an aerospace manufacturer operating in commercial, freight, and military markets. Headquartered in the Netherlands, the company designs, manufactures, and delivers aircraft.
Lockheed Martin (LMT)
- Market Cap: $114 billion
- Dividend Yield: 2.7%
- 10-Year Avg. Annualized Return: 15.2%
- Why We Picked It: Lockheed Martin Corp is one of the largest global aerospace and defense companies, formed in 1995 through a merger. It generates a significant portion of its revenue from contracts with the U.S. and foreign governments.

Types of Industrial Stocks: The article categorizes industrial stocks into four main sub-sectors:

Capital goods: Manufacturers of heavy machinery used in the production of other goods.
Aerospace and defense: Companies involved in building aircraft, manufacturing weapons systems, and related products for governments.
Transportation and logistics: Includes airlines, railroads, trucking firms, and parcel delivery firms.
Construction equipment and building supplies: Industrial companies producing machinery and products used in construction.

Advantages of Investing in Industrial Stocks:

Strong returns during economic upturns.
Large, well-established companies with a history of performance.
Regular dividends, with about 18% of dividend aristocrats being industrial stocks.

Risks of Investing in Industrial Stocks:

Underperformance during economic downturns.
Vulnerability to supply chain challenges.
Unpredictable dividend yields tied to economic fluctuations.

How to Buy Industrial Stocks: Investors can purchase industrial stocks through taxable brokerage accounts or tax-advantaged IRAs. Researching individual companies, assessing risks, and considering diversification through ETFs or index funds are recommended strategies.

In summary, the article provides a comprehensive overview of the best industrial stocks in January 2024, highlighting key players in various sub-sectors and offering insights into the advantages and risks associated with investing in this dynamic market.