In a shareholder-friendly move, Illinois Tool Works ITW has hiked its quarterly dividend by 7% to $1.40 per share (annually: $5.60). The move underscores the company’s sound financial health as it utilizes free cash flow to enhance shareholders’ returns.
The new dividend will be paid to shareholders on Oct 12, of record as of Sep 29. The dividend yield, based on the new payout and its Aug 7 closing price, is 2.2%.
Illinois Tool’s board has also authorized a new share buyback program allowing the company to repurchase up to $5 billion worth of shares over an open-ended period.
Illinois Tool Works Inc. Price
Illinois Tool Works Inc. price | Illinois Tool Works Inc. Quote
As of Jun 30, 2023, Illinois Tool is left to buyback approximately $740 million worth of shares under its existing $3 billion share repurchase program, announced in May 2021.
Apart from being active on the buyback front, ITW has a track record of consistently raising dividends over the last five years. Strong free cash flow generation capacity supports the company’s shareholder-friendly activities. In the first six months of 2023, the company reported free cash flow of $1,320 million, up 97.3% year over year. ITW projects free cash flow to be more than 100% of net income in 2023.
Zacks Rank & Key Picks
Illinois Tool presently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Manufacturing - General Industrial industry are as follows:
Xylem Inc. XYL currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 16.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Xylem has an estimated earnings growth rate of 23.9% for the current year. Shares of the company have gained 9.1% in a year.
Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). The company pulled off a trailing four-quarter earnings surprise of 18.1%, on average.
Applied Industrial has an estimated earnings growth rate of 30.4% for the current year. Shares of the company have rallied 37.2% in a year.
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