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Dow Chemical(DOW - Get Report) is having a strong year in 2012. Since the first trading day of the year, shares of the $39 billion firm have rallied 13.6%, besting the broad market by a fair margin. Dow is one of the largest chemical manufacturers in the world, with a hand in nearly every industry you can imagine. That diversified revenue base should attenuate some of the economic fears that are keeping investors on the sidelines of this stock.
Dow has spent the last several years positioning itself for long-term growth, building new production facilities in emerging markets and buying up subsidiaries with exposure to attractive sectors. While rising oil prices are a challenge for Dow, adding facilities in regions where oil and gas are lower cost should have a major impact on the firm's margins, especially if oil prices continue to climb through this summer.
Chemical manufacturing is a capital-intense business, and Dow carries a reasonable amount of debt as a result -- particularly after the firm's $17.3 billion Rohm and Haas acquisition in 2009. Still, ample cash generation from operations should help Dow deleverage its balance sheet and pay out a hefty dividend.
Yesterday, the firm announced a 28% dividend increase that brings the firm's dividend yield to 3.9%. For investors looking for broad industrial exposure, Dow's a solid option for a core income holding.