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Tim Lambert
Will Investing in American Manufacturing Pay for Your Retirement?
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Many politicians will talk about how all of the American jobs in manufacturing have been shipped overseas, claiming that the United States does not make anything, anymore.  But that is not true according to Mark Mills, writing in City Journal.  American companies such as The Dow Chemical Company (NYSE: DOW), Caterpillar (NYSE: CAT), and Dupont (NYSE: DD) have bullish futures for a variety of factors due to US manufacturing performing so well.

As Mills notes in his City Journal piece, “The U.S. is now the world’s Number One producer of oil and natural gas and a net exporter of refined hydrocarbons (“manufactured” gasoline and diesel). The Energy Information Administration forecasts some $2 trillion in private investment in this sector in the next decade. This dramatic growth has not resulted from new discoveries or the opening up of federal lands, but from the emergence of new technologies and techniques that enable the manufacturing of liquid and gaseous hydrocarbons from solid shale rock. The energy-intensive manufacturing ecosystem’s expansion will catalyze other manufacturing, both upstream and downstream; that’s how industrial and economic ecosystems work. Already, the new energy boom is driving a massive resurgence of investment into everything from plastics to fertilizers. The American Chemical Council has catalogued nearly 100 chemical-industry investments valued at over $70 billion due to come on line by 2017, generating over 1 million jobs and adding over $300 billion to GDP.”

That is particularly positive for chemical companies like Dow Chemical and Dupont.

It is certainly shown in the stock performance of each.  For 2013, Dupont has risen nearly 40%.  Over the same period, Dow Chemical has soared nearly 25%.  Both pay above average dividends.

Like Dow Chemical and Dupont, Caterpillar pays a high dividend, too.  But Caterpillar, the world’s largest equipment manufacturer, is down for the year due to weakness in the global mining sector.  But, as detailed in a previous article on this site, mining around the world will inevitably rebound.  When that happens, so will the stock price for Caterpillar.

The chart below shows how well The Dow Chemical Company has performed this year.  That is a very bullish sign for the rest of US manufacturing.  As the global economy slowly recovers from The Great Recession, stocks in the American manufacturing sector will continue rising.  The high dividend yield will make for a greater total return for shareholders.



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