While dividend stocks may not see as much growth during bull markets compared to growth stocks, they generally remain stable during economic downturns and bear markets. Yet while dividend stocks usually provide stability to investors, choosing dividend stocks to invest in can be challenging. Here is one dividend stock on sale.
Siemens Is an Undervalued Dividend Stock
When it comes to dividend stocks, one that is undervalued right now is the German industrial giant Siemens. Founded in 1847, Siemens AG is a German multinational conglomerate corporation with headquarters in both Munich and Berlin, Germany. The corporation serves as the largest industrial manufacturing company in Europe.
The main divisions of production within the Siemens corporation are Industry, Energy, and Healthcare. Siemens is also one of the most prominent makers of medical diagnostics equipment in the world. In 2021, Siemens employed more than 300,000 people while also generating a revenue of over $74 Billion.
Siemens, under the stock ticker SIEGY, has a market cap of around $117 Billion. The company also has an American Depositary Receipt and a 2.6% dividend yield.
The stock hit an all-time high of around $89 per share in May 2021 but has since come down by almost 20%. Yet the fundamentals remain strong. The company already blew past its estimates with 2022 Q1 earnings and is shaping up to achieve long-term gains in the areas of automation, industrial software, and smart infrastructure.
3 Reasons to Invest in Siemens
- Siemens Is Ready to Conquer the Fourth Industrial Revolution
The so-called “fourth industrial revolution is upon us as the digital and physical worlds have begun to collide. Automation, industrial software, and smart infrastructure are more important and valuable than ever before.
With that being said, the Siemens’ main revenue streams come from the sectors of Industry, Energy, and Healthcare.
The management team at Siemens has been shifting its focus toward these areas of growth. The company is and will be focusing heavily on the production and incorporation of automation, industrial software, digitalization, and electrification now and into the future.
This combination of factors all points to Siemens being ready to conquer the fourth industrial revolution moving forward.
Along with being ready to conquer the fourth industrial revolution, Siemens possesses diversity through its many revenue streams.
With the corporation having businesses in the Industry, Energy, and Healthcare sectors, Siemens is set up to have a steady cash flow. Overall, through its diversity, the company’s earnings and cash flow offers stability through the business cycle.
Furthermore, while the corporation’s digital industries and smart infrastructure rely on the state of the economy to drive revenue, the company’s products and investments in rail infrastructure, healthcare equipment, and diagnostics are generally less cyclical as it is in near-constant demand.
Ultimately, the diversity of the Siemens corporations provides the company with steady cash flow and ensures that shareholders will continually receive dividend payments regardless of the state of the economy.
A third and final core reason to invest in Siemens is impressive earnings. Specifically its P/E ratio suggests it has room to grow. The company is undervalued compared to similar stocks like Rockwell, Schneider, Johnson Controls, Alstom, Philips, and others.
All signs point to Siemens having a strong performance in the near future and beyond. Overall, Siemens is undervalued on an absolute and relative basis.
Siemens Suffers Mildly During The Worst of Times
Siemens revenue streams are highly diversified. This diversification allows the company to maintain a steady cash flow regardless of economic conditions. An example of the stability of the company is evident by looking at how its business segments performed during the worst of times in 2020.
Siemens’s segment earnings before interest, tax, depreciation, and amortization in the chart below.
| Industry | 2020 | 2019 |
| Digital Industries | 2,786 Billion Euros | 3,132 Billion Euros |
| Smart Infrastructure | 1,594 Billion Euros | 1,670 Billion Euros |
| Mobility | 1,039 Billion Euros | 1,083 Billion Euros |
| Siemens Healthineers | 2,807 Billion Euros | 2,931 Billion Euros |
| Industrial Businesses | 8,226 Billion Euros | 8,816 Billion Euros |
While earnings were down for Siemens during 2020, the declines were limited – a sign that in the worst of times the company suffers mildly.
The diversity and sheer size that Siemens possesses are what allow the company to maintain steady earnings and cash flow regardless of struggles within the stock markets or overall economy.
If you’re looking to invest in a company that is diversified, stable, and has long-term growth prospects, then Siemens checks all the boxes.
Is Siemens a Buy, Sell, or Hold?
Overall, Siemens offers investors a great mix of long-term growth potential, stability during trying markets, and historically consistent earnings and cash flow.
Furthermore, the three key reasons that point to Siemens stock being a buy right now can be summed up through the following three points.
- Siemens has exposure to a diverse range of industries like healthcare, transportation, digital industries, smart infrastructure, and more which help to stabilize the corporation’s earnings and overall cash flow.
- More businesses are in need and will continue to be in need of automation, industrial software, digitization, and electrification, all of which Siemens can provide.
- Siemens has been performing well and has great long-term growth prospects.
If you’re looking for a dividend stock to invest in right now, Siemens is one dividend stock that appears to be on sale and a great buy right now.
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