Dividend Aristocrats In Focus: Illinois Tool Works Inc. – Sure Dividend

Up to date on February eleventh, 2026 by Bob Ciura

At Certain Dividend, we frequently discuss concerning the deserves of the Dividend Aristocrats. We consider this unique group of shares broadly has robust manufacturers, constant income even throughout recessions, and sturdy aggressive benefits.

These qualities permit the Dividend Aristocrats to lift their dividends yearly, whatever the state of the financial system.

Of the shares comprising the S&P 500 Index, simply 69 qualify as Dividend Aristocrats.

You’ll be able to obtain a duplicate of the complete checklist of all 69 Dividend Aristocrats, full with metrics like dividend yields and P/E ratios, by clicking on the hyperlink under:

Disclaimer: Certain Dividend isn’t affiliated with S&P World in any manner. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet relies on Certain Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s based mostly. Not one of the data on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official data.

Every year, we individually evaluate all of the Dividend Aristocrats. The following within the collection is Illinois Software Works (ITW).

Illinois Software Works has a protracted historical past of dividend development even via recessions, which is particularly spectacular given the cyclical nature of its enterprise mannequin.

This text will focus on the key components for Illinois Software Works’ lengthy dividend historical past.

Enterprise Overview

Illinois Software Works has been in enterprise for greater than 100 years. It began out all the best way again in 1902. A gaggle of inventors fashioned with an concept to enhance gear grinding, and Illinois Software Works was born.

Immediately, Illinois Software Works generates annual income of $16 billion. Illinois Software Works consists of seven segments: Automotive, Meals Tools, Take a look at & Measurement, Welding, Polymers & Fluids, Development Merchandise, and Specialty Merchandise.

These segments have carried out properly towards its friends, which has allowed Illinois Software Works to attain “better of breed” standing in its trade.

Illinois Software Works’ portfolio is concentrated in product segments that every maintain above-average development potential of their respective markets.

The overarching strategic development plan for Illinois Software Works is to reshape its enterprise mannequin, when mandatory repeatedly. The corporate continuously makes use of bolt-on acquisitions to develop its attain.

Progress Prospects

On February third, 2026, Illinois Software Works reported fourth quarter 2025 outcomes for the interval ending December 31, 2025. For the quarter, income got here in at $4.1 billion, rising 4% year-over-year.

Gross sales elevated 5.5% within the Automotive OEM phase, the biggest out of the corporate’s seven segments. Moreover, its Development Merchandise phase noticed income decline 1.5%.

In the meantime, Welding, Meals Tools, Specialty Merchandise, Take a look at & Measurement and Electronics, and Polymers & Fluids had income development of three.3%, 3.8%, 4.0%, 5.5% and 6.5%, respectively.

Web revenue equaled $790 million or $2.72 per share in comparison with $750 million or $2.54 per share in This autumn 2024. Within the fourth quarter, ITW repurchased $375 million of its shares.

Illinois Software Works initiated its 2026 steerage, anticipating full-year GAAP EPS to be $11.00 to $11.40. It additionally expects to repurchase roughly $1.5 billion of its widespread inventory this yr.

Transferring ahead, development turns into a bit tougher as the corporate will get bigger. Nonetheless, the stability sheet is in good condition, permitting for some flexibility from a capital allocation standpoint.

Furthermore, enticing returns will be achieved with out venturing outdoors Illinois Software Works’ current core competencies. Illinois Software Works can proceed to put money into its gross sales networks, R&D, and manufacturing capability, whereas cost-cutting measures might proceed to spice up margins.

We anticipate 9% annual earnings-per-share development over the subsequent 5 years.

Aggressive Benefits & Recession Efficiency

Illinois Software Works has a big aggressive benefit. It possesses a large financial “moat,” which refers to its capability to maintain competitors at bay.

It does this with a large mental property portfolio. Illinois Software Works holds over 17,000 granted and pending patents.

Individually, one other aggressive benefit is Illinois Software Works’ differentiated administration technique. The corporate has employed a administration course of referred to as “80/20”.

That is an working system that’s utilized to each enterprise line at Illinois Software Works. The corporate focuses on its largest and finest alternatives (the “80”) and seeks to eradicate prices or divest its much less worthwhile operations (the “20”).

One potential draw back of Illinois Software Works’ enterprise mannequin is that it’s weak to recessions. As an industrial producer, Illinois Software Works is reliant on a wholesome world financial system for development.

Earnings-per-share efficiency throughout the Nice Recession is under:

• 2007 earnings-per-share of $3.36
• 2008 earnings-per-share of $3.05 (9% decline)
• 2009 earnings-per-share of $1.93 (37% decline)
• 2010 earnings-per-share of $3.03 (57% enhance)

That stated, the corporate remained extremely worthwhile throughout the Nice Recession. This allowed it to proceed rising its dividend annually throughout the recession, even when earnings declined.

The corporate additionally recovered shortly. Earnings-per-share soared 57% in 2010. By 2011, earnings-per-share surpassed 2007 ranges.

An identical sample was seen in 2020 because the coronavirus pandemic induced an financial recession. Illinois Software Works’ earnings-per-share declined in 2020, however the decline was manageable and the corporate continued to lift its dividend.

Valuation & Anticipated Returns

Illinois Software Works trades for a price-to-earnings ratio of 26.3. Given the corporate’s cyclical nature, we really feel {that a} goal price-to-earnings ratio 22.9 is suitable. That is roughly in step with the corporate’s 10-year historic common.

Consequently, Illinois Software Works is presently overvalued. Returning to our goal price-to-earnings ratio by 2030 would cut back annual returns by roughly 2.7% over this time period.

Apart from adjustments within the price-to-earnings a number of, future returns will likely be pushed by earnings development and dividends.

We anticipate 9% annual earnings development over the subsequent 5 years. As well as, Illinois Software Works inventory has a present dividend yield of two.2%.

Complete returns might include the next:

• 9% earnings development
• -2.7% a number of reversion
• 2.2% dividend yield

Illinois Software Works is anticipated to return round 8.1% per yr via 2030. We charge Illinois Software Works a “maintain” as we speak, though the corporate’s capability to lift dividends via a number of recessions is spectacular.

The corporate now has 62 consecutive years of dividend development, making ITW a Dividend Aristocrat and a Dividend King.

Closing Ideas

Illinois Software Works is a high-quality firm and a fair higher dividend development inventory. It has a strategic development plan that’s working properly, and shareholders have been rewarded with rising dividends for 62 years.

Shares are usually not attractively valued in the meanwhile, so we don’t deem Illinois Software Works as a “purchase” at present costs.

Illinois Software Works is a traditional instance of an important firm, however not a inventory to purchase proper now.

Regardless of its standing as a Dividend Aristocrat and Dividend King, we recommend traders look ahead to a greater entry level earlier than buying Illinois Software Works shares.

Extra Studying

Moreover, the next Certain Dividend databases include probably the most dependable dividend growers in our funding universe:

• The Dividend Champions: Dividend shares with 25+ years of dividend will increase, together with these that will not qualify as Dividend Aristocrats.
• The Dividend Kings: thought of to be the final word dividend development shares, the Dividend Kings checklist is comprised of shares with 50+ years of consecutive dividend will increase

In case you’re searching for shares with distinctive dividend traits, take into account the next Certain Dividend databases:

The most important home inventory market indices are one other stable useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month: