Illinois Tool Works Hikes Dividend 15%, Stock Gains 2% - Analyst Blog

Industrial tool manufacturer, Illinois Tool Works Inc. ( ITW ) announced a 15% increase in its quarterly dividend rate. The company's share price gained 1.9%, closing the trading session at $84.60 on Aug 8.

The revised quarterly dividend, as approved by Illinois Tool Works' board of directors, now stands at 48.5 cents, up from 42 cents paid earlier. On an annualized basis, the dividend has increased to $1.94 from $1.68 per share.

The company will pay the new quarterly dividend on Oct 7, 2014 to shareholders of record on Sep 30.

Illinois Tool Works follows a consistent policy of rewarding its shareholders handsomely through dividend payments and share buybacks. In the first half 2014, shares worth $2,905 million were repurchased and dividends of $355 million were paid.

The company, in second-quarter 2014, completed its 50 million accelerated share buyback program related to the divestiture of the Industrial Packaging business. Exiting the second quarter, the company was left with a $2.8 billion share repurchase authorization.

Illinois Tool Works' shareholder-friendly capital allocation strategy indicates a healthy cash position. In second-quarter 2014, the company generated cash of $573 million from its operating activities, while cash and cash equivalents stood at $5,297 million at the quarter end.

With a market capitalization of $34.2 billion, Illinois Tool Works currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Blount International Inc. ( BLT ), DXP Enterprises, Inc. ( DXPE ) and IDEX Corporation ( IEX ). While Blount International sports a Zacks Rank #1 (Strong Buy), both DXP Enterprises and IDEX Corporation hold a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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