Today's Pick: Timken

This week I'm seeking a prestigious and long-term dividend paying stock from the industrials business sector. 

That industrials sector includes twenty-three industries all related to designing, fabricating and servicing stuff we know, want and use. The industrials industries range from aerospace and defense to waste management with all the transportation, business services, and equipment required in between. 

Today I'm reviewing a mid-cap tools and accessories company, named The Timken Company. Its trading ticker symbol is TKR. The Timken Company was founded in 1899 and is headquartered in North Canton, Ohio.

The Timken Co engineers, manufactures and markets bearings, transmissions, gearboxes, chain, and related products under Timken brand, and offers a spectrum of power system rebuild and repair services around the world. It operates through two segments, Mobile Industries and Process Industries. 

The Mobile Industries segment offers a portfolio of bearings, seals, lubrication devices, and systems and related products and maintenance services to original equipment manufacturers (OEMs) and end users of off-highway equipment for the agricultural, construction, mining, outdoor power equipment, and power sports markets; and on-highway vehicles, as well as rail cars and locomotives.

The Process Industries segment supplies industrial bearings and assemblies; power transmission components, including gears and gearboxes; and couplings, seals, lubricants, chains, belts, and related products and services to OEMs and end-users in various industries.

I use three key data points to gauge the value of any dividend equity or fund like The Timken Company: 

(1) Price

(2) Dividends

(3) Returns

Besides those three, four more keys will finally unlock an equity or fund in which to invest.

But those first three primary keys best tell whether a company has made, is making, and will make money. 

TKR Price

Timken's price per share was $39.60 at Tuesday's market close. A year ago its price was $51.00 for a price drop of $14.10 per share for the year.  

Assuming Timken's price will trade in the range of $30 to $60 next year, Timken's recent $39.60 price could improve by $10.00 to $49.60 by late-October, 2019. 

TKR Dividends

Timken's most recent quarterly dividend was $0.28 declared August 7th and paid September 5th 

At this most recent $0.28 quarterly rate, Timken's annual dividend equals $1.12, yielding 2.8% at yesterday's closing $39.60 price.

Gains For TKR?

Adding the $1.12 estimated annual dividend to my estimated $10.00 annual price upside for The Timken Company (TKR) makes a $11.12 potential gross annual per share gain, which will be reduced by any costs to trade the shares.  

 A little under $1,000.00 invested today at the $39.60 recent price buys 25 TKR shares. 

A $10 broker fee paid half at purchase and half at sale costs $0.40 per share

Subtracting that $0.40 brokerage cost from the estimated $11.12 gross annual gain leaves a net gain of $10.72 X 25 shares 

= $268.00

or a nearly 27% net gain on a $990.00 investment.

Therefore, TKR now shows a possible 27% net gain including a 2.8% dividend yield. 

Nine brokers cover this stock:

• Six say "buy" TKR. None say TKR will "outperform" its peers.
• The other three say "hold" TKR.

Out those two opinions, the general recommendation number comes up as 1.7 or "outperform".

These nine wizards of wall street reckon a price target $9.00 higher than my estimated $49.60 outcome.

So, you could look at these speculative numbers this way, The Timken Company has made money, is making money, and could net a 27% to 40% net annual gain including a 2.8% dividend yield. It could be more, it could be less. 

The above speculation is based on past year performance. The actual results remain to be seen to determine if The Timken Company (TKR) is worth your time and money.