Am I reviewing a manufacturing stock that has barely eked out a 10-year average annual total return of 2.92% during one of the greatest bull runs in economic history?

Yes.

Standard Motor Products is an ultra-cheap stock with solid fundamentals and a growing dividend. While the company’s performance has been lackluster for the past decade, shares are up 37% over the last twelve months.

This outsized gain is mostly sentiment-driven, and I think Standard Motor Products could move higher purely on a re-rating of its current valuation.

Even if that doesn’t happen, Standard Motor Products is still a compelling income investment. I’ll explain why.

Standard Motor Products may not be a household name, but it is a well-established company that was founded in 1919. It manufactures replacement parts for vehicles and operates across three segments: Vehicle Control, Temperature Control, and Engineered Solutions.

The company sells these parts under the Standard, Blue Streak, Echlin, BWD, and Four Seasons brands. Its customers include retailers such as NAPA, AutoZone, and O’Reilly, as well as warehouse distributors.

The stock has traded mostly flat for nearly a decade. Shares sold off sharply on tariff fears last spring, only to rebound over the following 12 months. Even after the 37% rally, Standard Motor Products still trades at a single-digit valuation, with a price to earnings ratio of 8.39.

The company offers a relatively high yield, with a 3.58% starting dividend. It also maintains a low payout ratio of 31.34% and has historically raised its dividend by roughly 6–7% annually.

Standard Motor Products did briefly suspend its dividend at the start of 2020, but reinstated it by October of the same year.

I view Standard Motor Products the same way I view ABM Industries: a cheap company with solid fundamentals and a steadily growing dividend. According to the Rule of 72, if Standard Motor continues increasing its payout at an average rate of 6.5% per year, investors could see a 7%+ yield on cost within 11 years. Additionally, if the company is simply re-rated from a PE ratio of 8.39 to 10, the share price would jump from $37 to $44.

Standard Motor Products is a century-old business trading at a low valuation and yielding over 3.5%. The combination of a low PE ratio and steady, well-covered dividend growth has me interested in buying shares.

At worst, this is a slow-growth company that consistently pays and raises its dividend.

At best, the market assigns it a double-digit multiple again, delivering capital appreciation alongside reliable quarterly income.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.