While their payouts tend to be above average, income investors don't buy Dividend Aristocrats just because they pay well. The fact that a company has raised its dividend annually for at least 25 consecutive years is also evidence that it's a growing business with reliable earnings and cash flow and that it can raise its dividend in good times and in bad.

That description fits Raytheon Technologies (RTX 0.84%), Emerson Electric (EMR -0.67%)and Roper Technologies (ROP 1.35%) to a T, and these three industrial stocks have even more exciting growth prospects in 2023. Let's find out what these three have planned.

1. Raytheon Technologies

2022 has been a curious year for aerospace and defense giant Raytheon. Management started the year expecting solid increases in profitability from its commercial aerospace businesses (Collins Aerospace and Pratt & Whitney), and solid increases in earnings from its defense-focused businesses (Raytheon Intelligence & Space or RIS, and Raytheon Missiles & Defense or RMD). 

However, many things can happen in a year, and Raytheon will enter 2023 in a slightly different shape. 

  • The recovery in commercial aerospace was stronger than expected in 2022, and Collins and Pratt & Whitney will generate more profits than initially expected.
  • Supply chain pressures, component shortages, and a tight labor market extended throughout 2022, and the first two of those were exacerbated by the war in Ukraine. Consequently, RIS and RMD will generate lower profits in 2022 than they did in 2021.
  • Geopolitical conflicts and the need to replace the equipment they donated to Ukraine's defense have left governments worldwide needing to boost their own defense spending. Management believes Raytheon's defense-related revenue will grow at a mid- to high-single-digit percentage rate through 2025. 

As such, investors can look forward to ongoing solid growth at Collins and Pratt & Whitney. Meanwhile, even though the near-term picture is weaker at RMD and RIS (due to supply chain issues), the medium-term outlook looks better. Assuming a gradual easing of supply chain pressures, RMD and RIS should be able to start executing better on their backlogs in 2023. 

It all points to excellent earnings growth for Raytheon in the coming years. 

2. Emerson Electric

One of the current themes in the industrial sector involves conglomerates shedding non-core units to focus on their core businesses -- and in Emerson's case, that core business is automation. That's a strategy that Siemens and ABB are pursuing as well -- both companies sold or spun off businesses to increase their overall exposure to the automation and industrial software niches. 

Automation is an attractive market now as it helps companies shift production away from low-labor-cost countries -- a key consideration for manufacturers given the stresses placed on the global supply chain in recent years. In addition, advancements in digital technology and industrial software (i.e., the Internet of Things) enable significant productivity enhancements via automation. 

Emerson tried to buy U.S. peer Rockwell Automation in 2017 to expand its footprint in the automation market. After Rockwell rebuffed that offer, Emerson instead embarked on a more gradual transformation -- first buying software technology company Open Systems International in 2020 and then contributing all its industrial software businesses and $6 billion in cash for a 55% stake in AspenTech in 2022.

That transformation process continued with last month's announcement of a deal to sell the majority of its climate technologies business to Blackstone.

Emerson will enter 2023 as a company focused on growing its automation business organically and via acquisitions, and investors can look forward to years of profitable growth.

3. Roper Technologies

Up until 2015, Roper Technologies was known as Roper Industries. Its name change reflected the company's evolution toward application and network software. Among other things, that resulted in a deal to sell a 51% stake in its process technologies segment and industrial businesses to a private equity firm in 2022.

The $2.6 billion in proceeds it reaped from that deal and its ongoing cash flow generation will enable Roper's management to do what it does best -- acquire asset-light businesses operating with high-profit margins in niche businesses. While those companies do get integrated into Roper, it tends to allow prior management to keep running them, though capital allocation decisions are made centrally. The cash flow from those acquisitions is then used to pay dividends, reduce debt, and help finance further acquisitions.

It's a highly successful business model that's resulted in stellar returns for investors. The stock is up about 300% over the last decade.

Roper's management has already begun the next phase by agreeing to a $3.7 billion deal to buy school administration software company Frontline, and it has a further $4 billion in firepower to acquire more businesses.

If history is a guide, Roper's strategy will likely result in even more market-beating returns as it hits the acquisition trail.