These 2 Dividend Stocks Are Worth Buying More of While the Market Is Distracted

Nordson reported Q1 revenue of $669M (+9% YoY) and EPS of $2.38 (+44% YoY), and raised full-year revenue guidance to $2.86B–$2.98B with adjusted EPS guidance of $11.00–$11.60 (midpoint +10.3%). Badger Meter posted 2025 sales of $916.7M (+11%) and record EPS of $4.79 (+13%), with SaaS sales up 27% and SmartCover contributing $40M in sales since its $185M acquisition. Nordson remains a Dividend King with 62 consecutive annual increases (2025 raise +5%, yield ~1.22%); Badger has 33 consecutive increases (2025 raise +17.6%, yield ~1.01%), underscoring stable cash flow and continued dividend-growth potential.

Analysis

Nordson's product mix positions it to capture both discrete capex cycles (new line installs) and annuity-like aftermarket sales (consumables and service). That bifurcation creates asymmetric upside in slower growth environments: capital spending falls first, but consumables remain sticky, supporting margin resilience and free cash flow conversion over 12–36 months. A second‑order beneficiary are precision component suppliers (servo motors, piezo valves, optical sensors) whose order visibility will recombine more tightly with electronics OEM cycles if Nordson's advanced‑technology segment continues to grow.

Badger Meter's pivot to SaaS and sensor-enabled services is a structural margin reallocation from one‑time hardware to recurring revenue, which should compress revenue volatility tied to municipal capex timing. The immediate lever is cross‑sell into existing AMI install bases and recent bolt‑ups that provide product adjacencies (sewer sensors, telemetry). Expect municipal budget seasonality and grant-driven upgrades to introduce lumpy near‑term cadence but steadier multi‑year ARR growth, which can justify 1–2 turns of multiple expansion versus legacy meter peers.

Key risks are correlated: a synchronized slowdown in electronics capex and municipal infrastructure spending would hit both names in different ways — Nordson via order flow and Badger via delayed SaaS onboarding and hardware installs. Execution risk for Badger’s software scaling and integration of recent acquisitions is nontrivial and could compress margins in the next 6–18 months if churn or implementation costs overshoot. Currency, OEM inventory destocking, and accelerated substitute technologies (alternative sensing or pooled procurement by utilities) are credible catalysts that could reverse the current positive trajectory.

Tactically, catalysts to watch are quarterly ARR growth and churn for Badger, and gross margin + aftermarket mix for Nordson; both will drive re‑rating more than headline revenue. Trade windows: use pullbacks tied to sector de‑risking (industrial/utility risk‑off days) to initiate positions, and prefer option structures to express asymmetric upside while limiting drawdowns in the 3–18 month horizon.

Key Decisions for Investors

• Long NDSN equity (size 1.5–3% portfolio) with a protective put (3–6 month) to limit downside to ~12–15%; target 30–50% total return over 12–18 months if aftermarket mix and margin beat expectations; trim into strength.
• Long BMI via a paired trade: buy BMI (1–2% portfolio) and short ITRI (or comparable legacy meter provider) equal dollar (0.8–1.0 ratio) to isolate SaaS re‑rating vs hardware; 6–12 month horizon, target 25–40% pair spread tightening, stop if spread moves against by 20%.
• Buy a 12–18 month call spread on BMI (debit spread) sized as a 0.5–1% portfolio bet to play SaaS multiple expansion; defined downside limited to premium, target 2–3x payoff if ARR growth accelerates and guidance is raised.
• If risk appetite is lower, sell covered calls on existing NDSN positions (30–60 day expiries) to harvest yield while keeping upside capped; use proceeds to finance incremental BMI exposure — manage net delta to remain long biased but hedged.