Stanley Black & Decker’s Dividend Yield Is Recovering

Stanley Black & Decker’s dividend yield

As of May 31, Stanley Black & Decker’s (SWK) dividend yield stood at 2.07%, an increase of 14 basis points over the first quarter of 2019, which indicates that Stanley Black & Decker’s dividend yield is recovering and could continue for a while. SWK’s peers Honeywell (HON), Deere (DE), and Caterpillar (CAT) have dividend yields of 1.98%, 2.2%, and 3.35%, respectively.

Stanley Black & Decker’s Dividend Yield Is Recovering

SWK’s dividend yield is more or less on par with selected peers with the exception of Caterpillar. However, SWK’s current dividend yield is lower than the dividend yield generated from one-year Treasury bonds. Thus, for long-term dividend investors, SWK may not look so attractive. To lure investors, SWK should increase its dividend rate to improve the dividend yield. SWK is likely to increase its dividend rate in the next quarter. Going by the historical trend, it’s expected that SWK could raise its dividend to $0.69 per share. On an annual basis, this increase would be $2.76 per share and translate to a forward dividend yield to 2.17%.

Why SWK’s dividend yield is rising

The rising trend in Stanley Black & Decker’s dividend is primarily due to the decline in SWK’s stock price. In 2019, the stock hit a high of $153.08, and since then, the stock price has been on a declining trend. With the continued trade war between the US and China, SWK’s stock price could decline further and boost SWK’s dividend yield.

For indirect exposure to Stanley Black & Decker, investors can consider the Invesco S&P 500 Equal Weight Industrials ETF (RGI), which has invested 1.4% of its portfolio in the company as of May 30.