Balancing Dividends and Fundamentals: The Case of ILLINOIS TOOL WORKS (NYSE:ITW).

Consider ILLINOIS TOOL WORKS (NYSE:ITW) as a top pick for dividend investors, identified by our stock screening tool. ITW shines in terms of profitability, solvency, and liquidity, all while paying a decent dividend. Let's dive deeper into the analysis.

Understanding ITW's Dividend Score

An integral part of ChartMill's stock analysis is the Dividend Rating, which spans from 0 to 10. This rating evaluates diverse dividend factors, including yield, historical data, growth, and sustainability. ITW has received a 7 out of 10:

• ITW's Dividend Yield is rather good when compared to the industry average which is at 1.86. ITW pays more dividend than 89.68% of the companies in the same industry.
• The dividend of ITW is nicely growing with an annual growth rate of 6.98%!
• ITW has been paying a dividend for at least 10 years, so it has a reliable track record.
• ITW has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
• ITW's earnings are growing more than its dividend. This makes the dividend growth sustainable.

Evaluating Health: ITW

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of ITW, the assigned 5 reflects its health status:

• An Altman-Z score of 8.56 indicates that ITW is not in any danger for bankruptcy at the moment.
• The Altman-Z score of ITW (8.56) is better than 90.48% of its industry peers.
• ITW has a debt to FCF ratio of 2.76. This is a good value and a sign of high solvency as ITW would need 2.76 years to pay back of all of its debts.
• ITW has a better Debt to FCF ratio (2.76) than 65.87% of its industry peers.

Looking at the Profitability

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For ITW, the assigned 9 is a significant indicator of profitability:

• ITW has a Return On Assets of 23.15%. This is amongst the best in the industry. ITW outperforms 99.21% of its industry peers.
• The Return On Equity of ITW (105.19%) is better than 100.00% of its industry peers.
• The Return On Invested Capital of ITW (28.87%) is better than 97.62% of its industry peers.
• ITW had an Average Return On Invested Capital over the past 3 years of 27.14%. This is significantly above the industry average of 10.90%.
• The 3 year average ROIC (27.14%) for ITW is below the current ROIC(28.87%), indicating increased profibility in the last year.
• ITW's Profit Margin of 21.94% is amongst the best of the industry. ITW outperforms 96.83% of its industry peers.
• ITW's Profit Margin has improved in the last couple of years.
• ITW has a Operating Margin of 26.82%. This is amongst the best in the industry. ITW outperforms 98.41% of its industry peers.
• ITW's Operating Margin has improved in the last couple of years.
• ITW has a better Gross Margin (44.28%) than 82.54% of its industry peers.

More Best Dividend stocks can be found in our Best Dividend screener.

For an up to date full fundamental analysis you can check the fundamental report of ITW

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.