Dividend Aristocrat Overview: Illinois Tool Works, Inc.

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About Illinois Tool Works, Inc.

Illinois Tool Works, Inc. is a global manufacturer of a variety of products serving the food safety, electronics and construction industries. The company is headquartered in Glenview, IL, with operations in 56 countries and employs 51,000 people. Illinois Tool Works’ intellectual property includes nearly 10,000 patents.

The company’s business operations are divided into 7 segments:

  • Automotive Original Equipment Manufacturing, which creates and manufactures items molded products for automobiles such as a capless refueling system.
  • Test & Measurements and Electronics, which manufactures equipment, consumables and related software for testing and measuring of materials and structures, and equipment and consumables used in the production of electronic subassemblies and microelectronics.
  • Food Equipment. This segment manufactures commercial food equipment products like blast chiller technology to improve food safety.
  • Polymers & Fluids, which manufactures adhesives, sealants, lubrication and cutting fluids, janitorial and hygiene products, and fluids and polymers for auto aftermarket maintenance and appearance.
  • Welding.  This segment creates products like an integrated arc welding and weld monitoring system, and other welding equipment and consumables for a variety of industrial applications.
  • Construction Products, such as fastening systems and truss products for the commercial, residential and remodeling/ renovation sectors.
  • Specialty Products. This diversified segment includes beverage packaging equipment and consumables, product coding and marking equipment and consumables, and appliance components and fasteners.

Illinois Tool Works was founded in 1912 when a small group of tool inventors responded to financier Byron L. Smith’s request for investment ideas. The company’s first acquisition was in the 1920s, when ITW bought Shakeproof Screw and Nut Lock Company to better provide hardware to the rapidly growing automotive industry. The company has continued to grow through both organic product development and acquisitions. Illinois Tool Works’ current goals are to have 67% of growth from organic sources and 33% from acquisitions.

Illinois Tool Works is a member of the S&P 500 index and a Fortune 500 company; its shares trade under the ticker symbol ITW.

Illinois Tool Works’ Dividend and Stock Split History

Illinois Tool Works has increased dividends since 1963 and met the Dividend Aristocrat criteria of 25 consecutive years of dividend increases in 1987.  The company usually announces annual dividend increases in August, with the stock going ex-dividend in September.

Air Products has compounded its payout at an average rate of 11.3% over the last 5 years and 12.3% over the last 10 years.

Over the last 42 years, Illinois Tools has split its stock 2-for-1 6 times, most recently in May 2006.  The company also split its stock 2-for-1 in May 1997, June 1993, May 1987, May 1984, and January 1973.

Direct Purchase and Dividend Reinvestment Plans

Illinois Tool Works has both direct purchase and dividend reinvestment plans. The plans are only open to existing shareholders of Illinois Tool Works stock. What this means is that if you do not currently own any Illinois Tool Works stock, you have to buy at least one share through a broker and then have the shares transferred into your own name. (When you own shares through a broker, from the company’s perspective the broker is the registered shareholder. The broker then keeps track of the various company stock that you own. Your broker can give you more information on how to register the shares in your name.) Investors interested in participating in either of these plans can find information at ComputerShare’s Investment Plan site. If you’re interested in directly purchasing Illinois Tool Works stock, the minimum purchase is $100 whether investing by check or by automatic debit.

The plans have both purchase and sales fees. There is no fee to set up a direct purchase or dividend reinvestment plan. When buying more Illinois Tool Works’ stock directly through the plan, you’ll pay a $1.50 fee if you have the purchase amount deducted automatically from your checking or savings account on a regular basis. For purchases by check and for one-time direct debits, you won’t pay a purchase fee. Illinois Tool Works pays all other fees and commissions on stock purchases, including dividend reinvestments.

When you go to sell your shares, you’ll pay a transaction fee of 7 cents per share sold. There’s an additional fee of $10 if you request that your shares be sold in a market order instead of a batch order. The plan deducts the fees from the proceeds of the sale.

Helpful Links

Illinois Tool Works’ Investor Relations Website

Current quote and financial summary for Illinois Tool Works, Inc. (finviz.com)

Information on the direct purchase and dividend reinvestment plans for ITW

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

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