Rockwell Automation

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Rockwell Automation ( ROK) manufactures tools and controls used to increase efficiency at factories. Fittingly, the firm has been reducing its exposure to U.S. manufacturing in recent years, taking advantage of massive manufacturing expansion overseas to retool new factories in Europe and emerging markets. That widened geographic footprint should help to reduce economic swings in ROK's revenues.

Those swings should also be reduced thanks to changes in ROK's business. Because Rockwell's focus is on reducing costs for customers, it has an easier sale than other firms that are trying to tack less palpable products onto factory floors. If Rockwell can justify the cost savings of its automation equipment, it should get the same -- now that management has sold off the more cyclical power systems business, that consistency should be more apparent on its income statement.

Rockwell has a long track record of returning free cash to shareholders; in the last few years, it's averaged sending around half of all the cash it generates back to its owners. With profits eclipsing pre-recession highs, that's good evidence for a hike to ROK's 43-cent quarterly payout.

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-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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