Illinois Tool Works' Dividend Growth Makes It a Strong Industrial Stock

Illinois Tool Works Inc. (NYSE:ITW) is included among the 13 Best Industrial Dividend Stocks to Buy Right Now.

The company stands out as a strong example of setting bold objectives, meeting them, and delivering long-term value to its shareholders. Between 2012 and 2023, ITW implemented its Enterprise Strategy, which led to a rise of over 9 percentage points in operating margin, more than tripled both its earnings per share and market capitalization, and grew its dividend by 3.7 times.

Illinois Tool Works Inc. (NYSE:ITW) currently offers a quarterly dividend of $1.50 per share, with a dividend yield of 2.31%, as of July 13. The company has been rewarding its shareholders with growing dividends for the past 52 years.

Illinois Tool Works Inc. (NYSE:ITW) aims to reach a 30% operating margin by 2030 and deliver average annual earnings per share growth of 9% to 10%, which would allow for a 7% yearly increase in its dividend. The company also plans to turn all of its net income into free cash flow, helping to fund rising dividends, share repurchases, and ongoing investments in the business. While the strategy is ambitious, ITW’s consistent improvement in operating margin over time shows that it’s achievable.

While we acknowledge the potential of ITW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.