ILLINOIS TOOL WORKS (NYSE:ITW) - A Reliable Dividend Stock with Strong Profitability

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

Dividend Strength

• Dividend Yield: ITW offers a yield of 2.49%, slightly above the industry average of 1.94% and in line with the S&P 500's 2.43%.
• Dividend Growth: The company has increased its dividend at an average annual rate of 6.98% over the past five years, demonstrating a commitment to rewarding shareholders.
• Track Record: ITW has paid dividends for at least 10 consecutive years without reductions, reinforcing its reliability.
• Payout Ratio: At 50.96%, the payout ratio is sustainable, supported by earnings growth that outpaces dividend increases.

Profitability Highlights

• High Margins: ITW boasts an Operating Margin of 25.93% and a Profit Margin of 21.37%, ranking among the top performers in its industry.
• Strong Returns: The company delivers a Return on Invested Capital (ROIC) of 25.21%, well above its cost of capital, indicating efficient use of resources.

Financial Health Considerations

• Solvency: ITW maintains a solid Altman-Z score of 8.25, signaling low bankruptcy risk. However, its Debt-to-Equity ratio of 2.55 is higher than industry peers, warranting attention.
• Liquidity: A Current Ratio of 1.60 suggests sufficient short-term liquidity, though it lags behind some competitors.

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

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

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.