Eaton Corporation plc

EATON: “We make what matters work.” Power is everywhere.
ETN has a huge customer base with many desirable products.

I own 500 shares of ETN as a long-term investment. The last time I did a review of my top ten, ETN was in the list. However, since then, I have “risked” losing some of my shares of this fine company using covered calls. This risk has paid off, as I have earned about $955 in three months in additional income and have not had to sell any of my shares. At the current price (close as of 05/21/21) these shares are worth about $72,000.

Our Current Ownership of ETN

Because I bought shares over time, starting in 2012 with a purchase of 200 shares at $37.12 per share, my cost basis averages $63.96 per share. When I find a company I like, I buy more shares over time. In addition to the 124.26% appreciation of the shares, I have banked a considerable total amount of dividends from this investment. From the beginning of 2016, until today, I have received $4,805.50 that was used to buy other investments. This has a snowball affect on the growth of our investment portfolio.

ETN has a less favorable dividend grwoth profile.
Always be aware of gaps in a company’s dividend payment history. Be thoughtful and careful.

Why Does ETN Qualify for the TOP TEN?

Eaton is the only industrial in our top ten investments. It isn’t the only industrial we hold, but it receives top honors for several reasons. The P/E ratio is a rich 23.00, so that I why I am willing to risk the sale of the shares using covered call. In the meantime, the dividend yield is a satisfactory 2.12%. The dividend payout ratio I like to see is between 20-80%. ETN has a rational dividend payout ratio of 48.74%. ETN did have some gaps in dividend payments, but I was patient and was willing to skip some payments because of the growth potential. ETN has shown a tendency to beat the project earnings that analysts suggest. That usually makes investors more interested in buying shares. Although it doesn’t really sway my thinking, it is nice that ETN is a foreign investment: the company is located in Dublin, Ireland.

There are many Irish sayings. One of them is, “Always remember that hindsight is the best insight to foresight.” We can all talk about how great it would have been to buy AAPL, GOOG, MSFT, or TSLA when the company was first public. But the key to good long-term investing success is the same over-and-over again. Buy good investments and hold them. Collect the dividends. Be patient. There is no reason to panic sell when others are going crazy.

Investors like earnings revisions if the revisions are UP!

The Industrials and Electrical Components and Equipment Playing Field

According to Seeking Alpha, there are 528 Industrial investments you can choose from. Of those, 36 are “Electrical Components and Equipment” companies. ETN is currently ranked as 165 in the industrials. In the industry section they are in the top ten. ETN is number 9 out of the 36. Some other industrials that we own include: EBF, ITW, MRTN, PLUG, R, RSG, TITN, TRTN, and WM. PLUG and R are short-term speculative positions.

ETN’s Sector, Industry, and Market Cap

Sector: Industrials

Industry: Electrical Components and Equipment

Market Cap: $57.16B

Headquarters: Dublin, Ireland, founded in 1916

Company Profile

Eaton Corporation plc operates as a power management company. Its Electrical Americas and Electrical Global segment provides electrical components, industrial components, power distribution and assemblies, residential products, single and three phase power quality products, wiring devices, circuit protection products, utility power distribution products, power reliability equipment, and services in North and South America, as well as hazardous duty electrical, emergency lighting, fire detection, explosion-proof instrumentation, and structural support systems internationally. The company’s Hydraulics segment provides pumps, motors, and hydraulic power units; valves, cylinders, and electronic controls; industrial and hydraulic hoses, fittings, assemblies, thermoplastic hose and tubing products, couplings, connectors, and assembly equipment; and industrial drums and disc brakes. Its Aerospace segment offers pumps, motors, hydraulic power units, hoses and fittings, and electro-hydraulic pumps; valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems, and nose wheel steering systems; thermoplastic tubing products, fittings, adapters, couplings, and sealing and ducting products; fuel pumps, sensors, valves, and adapters and regulators; and wiring connectors and cables, as well as hydraulic and bag filters, strainers and cartridges, and golf grips. The company’s Vehicle segment offers transmissions, clutches, hybrid power systems, superchargers, engine valves and valve actuation systems, cylinder heads, locking and limited slip differentials, transmission controls, and fuel vapor components for the vehicle industry. Its eMobility segment provides voltage inverters, converters, fuses, onboard chargers, circuit protection units, vehicle controls, power distribution systems, fuel tank isolation valves, and commercial vehicle hybrid systems. The company was founded in 1916 and is based in Dublin, Ireland.