Stanley Black & Decker set to pay 1Q18 dividend
Stanley Black & Decker (SWK) is set to distribute its 1Q18 dividend on March 20, 2018. Investors holding the stock at the close of March 9, 2018, are entitled to the dividend of $0.63 per share. At the end of 4Q17, SWK had ~153.4 million outstanding shares. Assuming SWK does not buy back any shares until the record date, SWK would be paying ~$96.7 million in the form of dividends. In 1Q17, SWK paid a dividend of $86.7 million.
The declared dividend of $0.63 represents 8.6% growth year-over-year. Between 2012 and 2017, SWK’s dividend grew at a compound annual rate of 6.1%. SWK has continuously increased its annual cash dividend over the past 50 years. Industrial peers 3M (MMM), Deere (DE), and Caterpillar (CAT) have declared 1Q18 dividends of $1.36, $0.60, and $0.78 per share, respectively.
Free cash flow
FCF (free cash flow) is very important for investors as it indicates a company’s ability to pay dividends and increase its dividend rate. Dividends are usually paid from FCF. In 4Q17, SWK generated FCF of $786.3 million (~$5.10 per share), suggesting that SWK would be using ~12.4% of its FCF to pay dividends. However, if we look at all of fiscal 2017, SWK would be using 37.2% of its FCF to pay dividends, leaving the remaining FCF to be used for other purposes such as share buybacks, expansion, and debt repayment. Investors can indirectly hold SWK through the PowerShares DWA Consumer Staples Momentum Portfolio ETF (PSL), which had a 3.5% exposure to SWK as of March 13, 2018.