Illinois Tool Works

Illinois Tool Works is a diversified industrial manufacturer built around a decentralised model of specialised business units serving automotive, construction, food equipment, welding and other markets. Its distinctive 80/20 operating approach and patented, application-specific products give it consistently high margins and strong returns on capital across the cycle. ITW has one of the longest and most consistent dividend growth records in the industrial sector, having raised its payout for decades on the back of dependable free cash flow. The yield is moderate, so the appeal is the reliability and steady compounding of the increases rather than a high starting income. That deeply established record of rising dividends underpins its strong score.