ITW

A King Trading Near Fair Value, Which Is Unusual

Most of the highest-quality Dividend Kings trade either above their historical yield or below it, priced by the market as expensive or cheap. Illinois Tool Works sits almost exactly on its own line. Its 2.20% yield is 2% under its five-year average of 2.26% and level with its ten-year average of 2.21%, close enough that our screen tags the stock Fair rather than Undervalued or Overvalued. That makes ITW a useful reference point: this is roughly what a top-tier industrial King looks like when the market is neither chasing it nor discounting it.

Yield reference	Level	vs current
Current trailing yield	2.20%	—
5-year average	2.26%	−2%
10-year average	2.21%	0%

With the yield sitting this close to its norm on both horizons, there is no large price gap to close in either direction.

The 80/20 Machine Behind 59 Years

The consistency traces to how ITW is run. The company is known for a decentralized "80/20" operating model, concentrating effort on the small share of products and customers that drive most of the profit, and applying it across a diversified set of industrial businesses. That structure produces high margins and steady cash flow across a wide base, so no single end market decides the year. It is the kind of durable, spread-out earnings power that lets an industrial raise its dividend for 59 straight years.

The payoff shows up in how the company handles downturns. Because each unit is run to protect margins rather than chase volume, ITW tends to hold profitability when demand softens, which keeps the cash behind the dividend intact even in a weak year. A 59-year streak is not the record of a company that got lucky with the cycle. It is the record of one built to stay profitable through it.

A Payout With Room to Keep Going

The dividend is covered, if unremarkably so. ITW pays out 58.4% of earnings — the exact median for Dividend Kings on this snapshot — which leaves ordinary space for the raises to continue. What that ratio can and cannot tell an investor is covered in The Payout Ratio. What stands out is not the coverage but the 59-year streak sitting on top of it.

Metric	Illinois Tool Works (ITW)	King median
Dividend yield	2.20%	2.28%
Payout ratio	58.4%	58.4%
Consecutive raise years	59	54

Landing on the tier median in both yield and coverage is itself the point. ITW keeps more than 40 cents of every earnings dollar, enough to fund reinvestment and buybacks while still growing the dividend, and it does so at a valuation the market has priced as unremarkable.

The Read

So ITW is the plain-vanilla case, and that is what makes it instructive. A 59-year streak and a 58.4% payout describe a well-covered dividend, and the 2.20% yield sitting on its own average says the market has priced it fairly, neither a bargain nor a stretch. For an income investor, there is no timing edge to exploit here. There is simply a durable, well-covered dividend at an ordinary price, which for a King of this quality is its own kind of appeal. The screener is the quickest way to see which Kings currently sit further from their own averages than ITW does.

The dividend record and latest figures are in the company's filings on SEC EDGAR. We explain how stocks are grouped by history tier and assigned a current dividend profile on our methodology page.

Disclaimer: This is informational only and not financial advice. Figures reflect the site snapshot dated 2026-08-13 and move with the market. Investing carries risk of loss, including loss of principal.