Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg_wgtbHShTCKK2XXt7enTfens6dPKaR2S4n7Lnnf2u9RQDFbo3Jj-Nynoe9TsVrNWpYKspTAYw1Xip9hchVfas8BiAO7wjBBKnVVk1xB_Xy4uyn3qCdsuStV_FQLCk-jekwBlnbGepCE7u/s400/ITW.gif)
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively. The company derives over 57% of its revenues from international operations. In addition to that it is operating under eight segments: Industrial Packaging, Power Systems & Electronics, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and All Other.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpzwZOp209QOQnv2zQo69D9YE9O_7ioqiKgxdGgfTg0rBkgnJa3P5I3JAKBFHOadn9oyWh5B8Yu_SaEDPS3uwnF3mAxrjG5XpX7EfYy_wbdTjgnbZlZTUu2rgHmxcA1yvLgnpt5k_uZLWS/s400/EPS.jpg)
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilHvPSpc-3x0UrwlVp9auGV2OQ3sA3HimbBOxVOLChx-6F3bEGJtLKIUG6cQ-5CMBbNmFYOBmnEYZJQAdA0lXWUUsgQMuWJKUlUKdiXyVetYvQFYtGtDzyu-K3N9M21_FcCGXAFxK45hUQ/s400/ROE.jpg)
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSNaeE9YFVhyphenhyphen-zbd-mp1THNY4uO957MY3FU7KWHN0R_uRW77bydpvVfQbbOf0szH8BwUgxXg1GFX4dEphZ1wHEwne_L9J8idLRrKsgmuBxF9LcaOkRtfQ-8mjNIK4t7N376dZb75E7j15Y/s400/dps.jpg)
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEeWuR3RUKaGjg8wM_UfMoG9dQ_XBydTUtdlLjw3S914_9ZkPwAlGf5eNpryHmMwA31YZ-MgKcIL0-Qs-bUvoiu-Cx9Z3ftAjtPuzvA2E64FhkNg-jecULjgnvicF7QIO_K-g3XD3MoeKJ/s400/dpr.jpg)
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
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