Manufacturing companies have performed well in the first half of 2016, as the U.S. economy has shown signs that it is slowly improving. A weaker U.S. dollar has helped companies in the manufacturing sector increase exports, as their products have become cheaper for foreign customers; this is likely to support the industry through the remainder of 2016. The following five manufacturing stocks provide a starting point for exploring companies that are well positioned to benefit from increasingly favorable industry conditions.

Emerson Electric

Emerson Electric Co. (NYSE: EMR), founded in 1890, designs and manufactures electronic and electrical equipment for industrial, commercial and consumer markets. Its five business segments are process management, industrial automation, network power, climate technologies, and commercial and residential solutions. The company has a market cap of $34.7 billion. Emerson Electric has a trailing 12-month operating margin of 17.1%, which is superior to the diversified industrials industry average of 13.1%. It also uses minimal shareholder equity to finance assets, with a debt-to-equity (D/E) ratio of 0.5. The stock had appreciated 15.82% year to date (YTD) as of Aug. 12, 2016, and provides an inviting yield of 3.52%. Emerson Electric has had 59 consecutive years of dividend increases through 2015.

Johnson Controls

Johnson Controls Inc. (NYSE: JCI) manufactures automotive systems and building controls that optimize efficiencies of buildings, automotive batteries and interior systems of automobiles. The Milwaukee-based company posted fiscal third-quarter 2016 earnings per share (EPS) of $1.07, exceeding analysts' expectations of $1.03 a share. Johnson Controls offers a dividend yield of 2.63% and has a market cap of $28.1 billion. As of Aug. 12, 2016, the stock was trading at $44.10, toward the top of its 52-week range of $33.62 to $47.32. Investors are satisfied with a 13.88% YTD return.

John Deere

Deere & Co. (NYSE: DE) manufactures and sells agricultural, construction, forestry, commercial and consumer equipment, with large operations in the United States, Brazil, Russia, India, China and Europe. The company has a 60% market share of the farming equipment industry in the United States and Canada. This is derived from its prominent brand recognition and reputation for manufacturing high-quality innovative machinery. Deere's earnings have been impressive, beating expectations for the past consecutive six quarters through the second quarter of 2016. It is cheaper than many of its peers, with an attractive price-to-earnings (P/E) ratio of 15.4; this compares to the farm and construction equipment industry average of 78.6. The company has a market cap of $24.2 billion and offers a dividend yield of 3.12%. The stock had a YTD return of 2.53% as of Aug. 12, 2016.

Cummins

Cummins Inc. (NYSE: CMI) designs, manufactures and distributes diesel and natural gas engines. The company’s joint venture with China’s largest commercial vehicle manufacturer, Beiqi Foton Motor Co. Ltd. (600166.SS), positions it to increase growth in China. Additionally, Cummins costs were restructured in the fourth quarter of 2015; administration costs were reduced by 11%, and its headcount was reduced by roughly 2,000 employees. Cummins’ stock has performed strongly in 2016, returning 46.21% YTD as of Aug. 12, 2016, eclipsing the Standard and Poor’s (S&P) 500 Index’s return by an impressive 40%. It also pays investors an enticing yield of 3.08%. Its low payout ratio of 35.5% leaves ample room for further dividend increases. The company has a market capitalization of $21.4 billion.

Rockwell Automation

Rockwell Automation Inc. (NYSE: ROK) provides industrial automation products such as motor control devices, sensors and industrial control panels. The company’s earnings have beaten Wall Street expectations four out of the last seven quarters through the fiscal third quarter of 2016. Rockwell Automation offers solutions that are likely to be enhanced by incorporating internet of things (IoT) technology into its products. It has a market cap of $15.2 billion. Investors receive a 2.47% dividend yield, which is slightly above the diversified industrials industry average of 2.2%. The stock is reasonably valued with a forward P/E ratio of 19.2. It had a YTD return of 16.77% as of Aug. 12, 2016.

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