Lincoln Electric and Scotts Miracle-Gro: Key Gabelli Dividend Picks

Mario Gabelli's GAMCO Investors held $48 million combined in Lincoln Electric and Scotts Miracle-Gro at the end of the first quarter. Both companies reported earnings and guidance updates that test the dividend thesis.

Lincoln Electric raised prices 10% to offset inflation. CEO Steven Hedlund said that was not enough during the first quarter. He noted that the company had announced additional pricing actions across its welding segments, with those increases set to take effect in early May. Automation solutions now account for more than 20% of sales. DA Davidson analyst Chris Dankert initiated coverage with a Buy rating and a $320 price target. He pointed to reshoring, an aging technical workforce, and growing Industry 4.0 investments as long-term drivers.

CFO Gabriel Bruno reported first-quarter sales rose about 12% year over year to $1.121 billion. Gross profit margin slipped 80 basis points to 35.6%. The pricing-versus-cost gap alone cost 90 basis points of margin. Free cash flow, typically light in Q1, took an extra hit from inventory builds tied to the Spotlight initiative and product migrations. Despite that, return on invested capital reached 21.5%, a figure Hedlund called top-quartile performance.

Scotts Miracle-Gro reaffirmed its full-year guidance after weaker May point-of-sale data. UBS analyst Peter Grom cut the price target to $63, citing softer demand, unfavorable weather, weaker consumer spending, and higher input costs. He said management is aiming to offset cost pressure through pricing actions and margin expansion. Stifel lowered its target to $75 but kept a Buy rating, saying the 2026 targets still look achievable even if sales come in at the low end of guidance.

Gabelli also holds American Express, State Street, and KKR in his dividend portfolio. American Express has an Alpha Score of 53, State Street 75, and KKR 42. Those positions offer steady income from financials with less earnings volatility than the industrial and consumer names.

The Gabelli Dividend Growth Fund has returned $2.3 billion to shareholders since its IPO, $655 million in dividends alone. That track record suggests Gabelli will keep rotating into companies where the dividend is funded by free cash flow, not leverage.