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Monday July 23, 2012
Illinois Tool Works: 'Boring is beautiful'
by Vita Nelson, editor MoneyPaper  "Boring is beautiful" can describe our latest featured dividend reinvestment stock idea: Illinois Tool Works (ITW). You might think that a company making fasteners, filters, and equipment for the past century would hold little appeal for the average investor. But that's only true if you define the average investor as someone who's only interested in the next hot stock or a quick profit, a common misconception. The truth is that it takes decades to assemble a conglomerate of efficient operations that can operate in a highly independent, decentralized manner that each manage to produce profits that grow year after year, allowing the corporation to reward its shareholders with an ever-expanding dividend. If you examine the nature of the companies that have been succeeding for decades rather than months or weeks, a common thread emerges: Provide the simple things at the highest quality on a consistent basis and persistent growth will follow. Founded in 1912, the firm manufactures components and fasteners for automotive, construction, and industrial uses. It also makes specially engineered products, machinery, and consumables for the auto, construction, and food and beverage industries. Its growth strategy includes acquisitions, which have helped it expand to over 800 operating companies in 58 countries. Foreign sales accounted for 59% of the $17.8 billion in 2011 revenues. The company is expected to earn about $4.22 per share in 2012 and $4.70 per share in 2013, compared with $3.74 in 2011. The annual dividend, which has been increased for 48 consecutive years, now totals $1.44 per share, for a yield of 2.8%. Insiders own 4.5% and Northern Trust owns 9.9% of the 477.4 million shares, which is down from 617.3 million in 2003. Learn more about this financial newsletter at Vita Nelson's MoneyPaper. Related articles: 
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