Can A.O. Smith Weather Another China Headwind?
A.O. Smith (NYSE: AOS) isn't a household name for investors, but maybe it should be after 26 consecutive years of dividend increases. The average annual dividend increase over the last decade was roughly 11%, too, so this is a solid dividend growth stock. The only problem is that the industrial company has been facing some headwinds in one of its most important global markets: China. And things are only getting worse. With the stock price now down roughly 35% from its 2018 highs, is this an opportunity to buy on weakness, or should investors stay on the sidelines until the outlook in China is more clear?
A.O. Smith is not exciting in any way. Its bread-and-butter product is water heaters, though it has been expanding its reach into similarly boring fare like water and air purification. The thing is, while people in developed markets take hot water for granted; safe, reliable water heaters is still an affordable luxury in developing markets like China. Try taking a cold shower and you'll understand why anyone who can afford a water heater buys one.
Image source: Getty Images.
Source Fool.com
