As of December 20, Illinois Tool Works’ (ITW) dividend yield stood at 2.84%—an increase of 32 basis points compared to the dividend yield in the third quarter. 3M (MMM), Stanley Black & Decker (SWK), and Honeywell (HON) have dividend yields of 2.86%, 2.25%, and 2.46%, respectively.
Illinois Tool Works’ dividend yield has been on a declining trend since the third quarter of 2015. Since the third quarter of 2017, Illinois Tool Works’ dividend yield has shown an upward trend. The upward trend in the dividend yield is mainly due to higher growth in the dividend rate and the decline in the stock prices. Illinois Tool Works’ stock price hit a high of $178.88 in January. Since then, the stock has been on a declining trend. Illinois Tool Works has declined 30% from its high. The company’s dividend in the past four years has grown at a CAGR of 18.4%. As a result, Illinois Tool Works’ dividend yield is on an upward trend.
How good is the dividend yield?
Illinois Tool Works’ current dividend yield is better than most of its peers. The company’s dividend yield is higher than the yield generated from one-year Treasury bonds, which stood at 2.66%. Currently, Illinois Tool Works’ higher dividend yield provides investors with an opportunity to consider the stock as an alternative investment. Illinois Tool Works provides the right recipe for long-term investors looking for a consistent dividend yield and good dividend growth.
Investors could hold Illinois Tool Works indirectly by investing in the Invesco S&P 500 Equal Weight Industrials ETF (RGI). RGI has invested 1.5% of its portfolio in Illinois Tool Works as of December 20.