Illinois Tool Works Loses its CEO -- the Rising-Dividend Stock David Speer Leaves Behind
It’s always a good day to look at a S&P 500 Dividend Aristocrat, companies that have increased their dividend annually for the past 25 years. Companies like Illinois Tool Works (ITW), 3M (MMM) and Kimberly-Clark (KMB) have a record of rewarding long-term shareholders with rising payouts. There's no guarantee that they'll continue to hike the dividend, but the Aristocrats list features some of the better-run companies in the U.S.
Investors are wondering what’s next at ITW, the diversified manufacturing company, after CEO David Speer died of cancer. His successor has been named, and will be dealing with the same issues Speer did: slowed growth, or no growth, among many of the company’s hundreds of little business units.
Bigger acquisitions than in the past are being eyed, as well as the jettisoning of poorly-performing businesses. Despite the growth issues, the company gathers a good return on invested capital.
What’s truly remarkable, though, is ITW’s commitment to dividend growth. The dividend yield is currently about 2.6%, which is nice but not wonderful. But if you’re a buy-and-hold investor, this is one that should reward you with a steadily rising payout. The dividend, by the way, is well-covered by earnings.
And the stock is trading a discount to his historical valuation, or PE ratio.
Jeff Bailey is the editor of YCharts, which includes the just-released YCharts Pro Platinum for professional investors.
Filed under: Company Analysis