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ILLINOIS TOOL WORKS (NYSE:ITW) – A Reliable Dividend Stock with Strong Fundamentals

By Mill Chart

Last update: Jun 5, 2025

ILLINOIS TOOL WORKS (NYSE:ITW) stands out as a compelling choice for dividend investors, according to our Best Dividend Stocks screener. The company combines a solid dividend track record with strong profitability and reasonable financial health, making it a candidate worth examining for income-focused portfolios.

ILLINOIS TOOL WORKS stock chart

Why ITW Appeals to Dividend Investors

  • Dividend Yield & Growth: ITW offers a dividend yield of 2.44%, slightly above the S&P 500 average of 2.38%. While not the highest yield available, the company has increased its dividend for at least 10 consecutive years, with an average annual growth rate of 6.98%. This consistency suggests a commitment to returning value to shareholders.
  • Payout Sustainability: The payout ratio sits at 50.96%, indicating that ITW retains enough earnings to reinvest in the business while maintaining dividend payments. Earnings growth is expected to outpace dividend growth, further supporting sustainability.
  • Strong Profitability: ITW earns a 9/10 in ChartMill’s Profitability Rating, reflecting high margins and efficient capital use. Key metrics include a Return on Equity (ROE) of 103.95% and an Operating Margin of 25.93%, both well above industry averages.
  • Financial Health: With a 6/10 Health Rating, ITW maintains a manageable debt profile. The Altman-Z score of 8.25 signals low bankruptcy risk, though investors should note the elevated Debt-to-Equity ratio of 2.55, which is common in capital-intensive industries.

Valuation Considerations

ITW trades at a P/E ratio of 24.38, slightly below the S&P 500 average. While not cheap, the valuation aligns with peers in the machinery sector. Given its profitability and dividend reliability, the stock may justify its premium for long-term investors.

For a deeper dive into ITW’s financials, review the full fundamental report here.

Our Best Dividend Stocks screener provides more high-quality dividend stock ideas, updated daily.

Disclaimer

This is not investment advice. The observations here are based on current data, but investors should conduct their own research before making decisions.

ILLINOIS TOOL WORKS

NYSE:ITW (6/6/2025, 8:04:00 PM)

After market: 247.56 0 (0%)

247.56

+1.45 (+0.59%)



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ChartMill News Image2 days ago - ChartmillILLINOIS TOOL WORKS (NYSE:ITW) – A Reliable Dividend Stock with Strong Fundamentals

ILLINOIS TOOL WORKS (NYSE:ITW) offers a reliable dividend with strong profitability and financial health, making it a candidate for income-focused investors.

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