Illinois Tool Works (ITW) – A Dividend King Setting Up for a Move
When investors think about stocks that can weather just about any market cycle, “Dividend Kings” should come to mind. These are companies that have raised their dividends for more than 50 consecutive years—a very exclusive club. Illinois Tool Works is not only a member, it’s also starting to look like one of the more interesting setups right now.
ITW is a diversified industrial giant, with businesses that touch everything from automotive components and food equipment to packaging, welding, and construction products. In other words, it’s not tied to one niche—this is the type of company that keeps global industry running quietly in the background.
The company’s July earnings release reminded the market why ITW belongs on the radar. Management delivered better-than-expected results on both the top and bottom line, with operating margin ticking up to 26.3% from a year earlier. Free cash flow remains strong—$449 million in Q2 alone—with most of it ($375 million) returned to shareholders through buybacks. Even more important, management raised full-year earnings guidance while holding revenue forecasts steady.
At roughly 23x trailing earnings, ITW is trading cheaper than many of its industrial peers and in line with its own 10-year median multiple. For the next quarter, the company is projecting 3% revenue growth and 2.5% EPS growth year over year, not eye-popping numbers but steady progress. For income investors, the stock carries a 2%+ dividend yield with the strength of a 50-year growth record behind it.
On the technical side, ITW looks poised for a potential breakout. The stock has been coiling in what can be read as a symmetrical triangle or even an ascending triangle. Buyers are consistently stepping in at higher lows, suggesting accumulation. The chart is also on the verge of a bullish golden cross, with the 50-day moving average set to rise above the 200-day. A sustained push above $280 would confirm the breakout, while $240 has acted as solid support through the summer—an attractive level to define risk.
Put simply, ITW checks multiple boxes: strong fundamentals, improving guidance, shareholder returns, and a long history of dividend consistency. While aggressive traders may want to anticipate the breakout, long-term investors could view this as an opportunity to add a rare Dividend King at a reasonable valuation before momentum shifts further in its favor.
