Each year, we individually review all the Dividend Kings.
The next in the series is Illinois Tool Works (ITW).
Illinois Tool Works has increased its dividend for 50
consecutive years, which is especially impressive since it operates in a highly
cyclical sector. This article will discuss the major factors for Illinois Tool
Works’ long dividend history.
Business Overview
Illinois Tool Works has been in business for more than 100
years. It started out all the way back in 1902 when a financier named Byron
Smith placed an ad in the Economist. At the time, Smith was looking to invest
in a “high-class business (manufacturing preferred) in or near Chicago.” A
group of inventors approached Smith with an idea to improve gear grinding, and
Illinois Tool Works was born.
Today, Illinois Tool Works has a market capitalization of
$68 billion and generates annual revenue of nearly $15 billion. Illinois Tool
Works is composed of seven segments: Automotive, Food Equipment, Test &
Measurement, Welding, Polymers & Fluids, Construction Products, and
Specialty Products.
These segments have performed very well against its peers
and has allowed Illinois Tool Works to achieve “best of breed” status in its
industry.
Illinois Tool Works’ portfolio is concentrated in product
segments that each hold above-average growth potential in their respective
markets. The overarching strategic growth plan for Illinois Tool Works is to
continuously reshape its business model, when necessary. The company frequently
utilizes bolt-on acquisitions to expand its reach.
Growth Prospects
While 2020 was a very difficult year for the global economy,
due to the coronavirus pandemic which weighed heavily on economic growth,
Illinois Tool Works continued to generate steady profits. In 2021, the company
continued to grow its earnings and the stock price continued to run higher with
a total year return of 23.4% for the entire year of 2021.
No comments:
Post a Comment