Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. This dividend champion has raised dividends for 46 years in a row. The company most recently announced a 9.70% dividend increase to 34 cents/share.
Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively.
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
Relevant Articles:
- Automatic Data Processing (ADP) Dividend Stock Analysis
- Wal-Mart (WMT): A High Dividend Growth Stock
- Chubb Corporation (CB) Dividend Stock Analysis
- Family Dollar Stores (FDO) Dividend Stock Analysis...
This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to my feed [RSS], or have future articles emailed to you [Email] or follow me on Twitter [Twitter].
