Monday, September 12, 2011

DIVIDEND MACHINE for September 12, 2011 ITW Illinois Tool Works

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            Income investors must take advantage of poor markets; these are opportunities to search for deals.  ITW, Illinois Tool Works has been a company I have wanted to own.  My reasons for not buying ITW already are many, including already owning a bunch of industrial companies, and the dividend yield was a touch too weak for me in the past.

            Times have changed for me and perhaps for you too.  Earlier this year when the markets were up, I wrote calls on the industrials and the call  buyers took my stock.   I always make at least 10% on the gain from a call being taken, so I was happy to lose them.  Now I am a little short on industrials.  Since over time, industrials have provided nice dividend income that goes up during bad times and they share extra profit with us during boom times we always want to have a healthy allocation of industrials.  With the recent market swoon, I finally find an opportunity to add ITW to my income portfolio.

            ITW’s dividend fundamentals are solid.  Earnings are $3.85 per share per year, dividends were just increased again as they have been for at least five years.  ITW’s annual dividend is now $1.44 per share per year.  If you own ITW by September 30, 2011, you will receive the recently enhanced quarterly dividend of $.36 per share on October 12, 2011.  The dividend yield is 3.39% based on the closing price of $42.51 on Friday, September 9, 2011.  

            ITW has been in business for around one hundred years and is composed of 840 small businesses.  They have a very solid balance sheet as measured by D/E ratio, which is .39.

            If you have money to invest and want to buy a diversified industrial with a dividend yield that is well above what you can get from a corporate bond and with a dividend yield that has increased every year for at least five years, ITW is for you … and me!

Very Truly Yours,
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