ITW - Is Illinois Tool Works a Great Dividend Stock?
The diversified industrial giant Illinois Tool Works (NYSE: ITW) has raised its payout to shareholders annually for the last 45 consecutive years, earning itself a place on the S&P 500's list of Dividend Aristocrats. That said, income-seeking investors will be more interested in the sustainability of its dividend in the future than where it has been in the past. So let's take a look at the factors that will help us determine how attractive the stock is now as a dividend investing candidate.
The first metrics to look at are its current yield and its payout ratio (dividend per share divided by earnings per share). Obviously, dividend investors will prefer to buy stocks with higher yields, but they'll also want to invest in businesses that have the capacity to keep increasing their payouts. All other things being equal, a company with a higher payout ratio will find it harder to boost its dividend payout.
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