Is ILLINOIS TOOL WORKS (NYSE:ITW) a Good Fit for Dividend Investing?

ILLINOIS TOOL WORKS (NYSE:ITW) has caught the attention of dividend investors as a stock worth considering. ITW excels in profitability, solvency, and liquidity, all while providing a decent dividend. Let's delve into the details.

Analyzing Dividend Metrics

ChartMill provides a Dividend Rating for every stock, ranging from 0 to 10. This rating assesses various dividend aspects, including yield, growth, and sustainability. ITW earns a 7 out of 10:

• ITW's Dividend Yield is rather good when compared to the industry average which is at 2.12. ITW pays more dividend than 89.84% of the companies in the same industry.
• On average, the dividend of ITW grows each year by 6.98%, which is quite nice.
• ITW has paid a dividend for at least 10 years, which is a reliable track record.
• ITW has not decreased their dividend for at least 10 years, which is a reliable track record.
• The dividend of ITW is growing, but earnings are growing more, so the dividend growth is sustainable.

A Closer Look at Health for ITW

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. ITW was assigned a score of 5 for health:

• An Altman-Z score of 8.30 indicates that ITW is not in any danger for bankruptcy at the moment.
• With an excellent Altman-Z score value of 8.30, ITW belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
• ITW has a debt to FCF ratio of 2.76. This is a good value and a sign of high solvency as ITW would need 2.76 years to pay back of all of its debts.
• ITW has a Debt to FCF ratio of 2.76. This is in the better half of the industry: ITW outperforms 65.63% of its industry peers.

Profitability Assessment of ITW

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, ITW has achieved a 9:

• With an excellent Return On Assets value of 23.15%, ITW belongs to the best of the industry, outperforming 99.22% of the companies in the same industry.
• ITW has a better Return On Equity (105.19%) than 100.00% of its industry peers.
• With an excellent Return On Invested Capital value of 28.87%, ITW belongs to the best of the industry, outperforming 97.66% of the companies in the same industry.
• Measured over the past 3 years, the Average Return On Invested Capital for ITW is significantly above the industry average of 10.67%.
• The 3 year average ROIC (27.14%) for ITW is below the current ROIC(28.87%), indicating increased profibility in the last year.
• Looking at the Profit Margin, with a value of 21.94%, ITW belongs to the top of the industry, outperforming 96.88% of the companies in the same industry.
• ITW's Profit Margin has improved in the last couple of years.
• ITW's Operating Margin of 26.82% is amongst the best of the industry. ITW outperforms 98.44% of its industry peers.
• In the last couple of years the Operating Margin of ITW has grown nicely.
• ITW has a better Gross Margin (44.28%) than 82.81% of its industry peers.

More Best Dividend stocks can be found in our Best Dividend screener.

Our latest full fundamental report of ITW contains the most current fundamental analsysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.