Up to date on March twenty first, 2024 by Bob Ciura

Investing in high-quality dividend development shares can result in excellent long-term returns. Buyers in search of dividend revenue and sustainable development ought to begin with the Dividend Aristocrats, an unique group of firms which have raised their dividends for 25+ consecutive years.

With this in thoughts, we created a full record of all 68 Dividend Aristocrats and important monetary metrics like dividend yields and price-to-earnings ratios.

You may obtain an Excel spreadsheet with the total record of Dividend Aristocrats by utilizing 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 knowledge on this article and downloadable spreadsheet is predicated on Certain Dividend’s personal evaluation, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person buyers higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official information from S&P World. Seek the advice of S&P World for official info.

There are solely 68 Dividend Aristocrats. This text will evaluation diversified industrial producer Stanley Black & Decker (SWK).

Stanley Black & Decker has a tremendous monitor document of dividend funds. The corporate has paid dividends for 147 years and has elevated its dividend yearly for 56 consecutive years. At this time, the corporate’s dividend seems protected relative to its underlying fundamentals.

This text will talk about the qualities which have made Stanley Black & Decker a time-tested dividend development inventory.

Enterprise Overview

Stanley Black & Decker is the results of Stanley Works’ $3.5 billion acquisition of Black & Decker in 2009. Stanley Works and Black & Decker have been each named after their respective founders. Stanley Works was shaped in 1843 when Frederick Stanley began a small store in New Britain, Connecticut, the place he manufactured bolts, hinges, and different {hardware}. His merchandise developed a status for his or her high quality.

In the meantime, Black & Decker was began by Duncan Black and Alonzo Decker in 1910. Like Stanley, they opened a small {hardware} store. In 1916, they obtained a patent to fabricate the world’s first moveable energy software.

Over the subsequent 175 years, Stanley Black & Decker has steadily grown into one of many world’s largest industrial product producers.

Supply: Investor Presentation

Its most important merchandise embrace hand instruments, energy instruments, and associated equipment. It additionally produces digital safety options, healthcare options, engineered fastening programs, and extra.

The corporate has annual gross sales of greater than $15 billion. It operates three enterprise segments: Instruments & Storage, Safety, and Industrial merchandise.

The corporate has produced glorious development charges lately primarily attributable to an aggressive acquisition technique.

Development Prospects

On February 1st, 2024, Stanley Black & Decker introduced fourth quarter and full yr outcomes for the interval ending December thirty first, 2023. For the quarter, income declined 6.3% to $3.7 billion, which was $104 million under estimates. Adjusted earnings-per-share of $0.92 in contrast favorably to -$0.10 within the prior yr and was $0.14 higher than anticipated. For 2023, income fell 6.5% to $15.8 billion whereas adjusted earnings-per-share was $1.45.

Firm-wide natural development declined 7%. Natural gross sales for Instruments & Out of doors, the most important phase inside the firm, decreased 8% attributable to continued weak point in client outside and DIY classes. North America was decrease by 10% whereas Europe and Rising Markets have been each down by 1%. U.S. level of gross sales stay increased in comparison with 2019 ranges.

The Industrial phase decreased 4%, as beneficial properties in Engineered Fastening have been greater than offset by weaker Infrastructure outcomes. Adjusted gross margin expanded 220 foundation factors to 29.8% attributable to value controls and decrease stock destocking.

On a sequential foundation, the adjusted working margin improved 180 foundation factors. The corporate’s value discount program stays on monitor to ship $2 billion in pre-tax financial savings by 2025. Stanley Black & Decker has achieved $1.1 billion of value financial savings since beginning this system. Stock was diminished by $1.1 billion in This fall in comparison with the prior yr.

Acquisitions have helped form Stanley Black & Decker’s product portfolio. For instance, in 2017, Stanley Black & Decker closed on the $1.95 billion acquisition of the Instruments enterprise of Newell Manufacturers (NWL). This acquisition strengthened the corporate’s foothold in instruments and added the high-quality Irwin and Lennox manufacturers to the product portfolio.

Aggressive Benefits & Recession Efficiency

Stanley Black & Decker’s most important aggressive benefits are its model portfolio and international scale. Innovation and scalability are on the core of the corporate’s development technique. It has a management place in its three product classes, and its model power provides the corporate pricing energy, resulting in high-profit margins.

Moreover, it’s comparatively straightforward for the corporate to scale up its manufacturers, because of distribution efficiencies.

To retain these aggressive benefits, Stanley Black & Decker consistently invests in product innovation. That stated, Stanley Black & Decker isn’t immune from recessions. Earnings declined considerably in 2008 and 2009. As an industrial producer, Stanley Black & Decker is reliant on a powerful economic system and a financially-healthy client.

Stanley Black & Decker’s earnings-per-share in the course of the Nice Recession are under:

• 2007 earnings-per-share of $4.00
• 2008 earnings-per-share of $3.41 (15% decline)
• 2009 earnings-per-share of $2.72 (20% decline)
• 2010 earnings-per-share of $3.96 (46% enhance)

Regardless of the steep decline in earnings from 2007-2009, Stanley Black & Decker recovered simply as shortly. Earnings-per-share elevated one other 32% in 2011 and reached a brand new excessive. Earnings have continued to develop within the years since.

Valuation & Anticipated Returns

Utilizing the present share value of ~$96 and anticipated earnings-per-share for 2024 of ~$4.00, Stanley Black & Decker has a price-to-earnings ratio of 24. That is increased than the long-term common valuation of 12.

Stanley Black & Decker inventory seems to be overvalued, on condition that its price-to-earnings ratio is increased than its historic norm, which can be our honest worth estimate for the inventory. If the inventory’s valuation have been to compress to satisfy its historic common by 2029, buyers would expertise a -12.9% headwind to annualized complete returns over this time.

Going ahead, returns will, due to this fact, seemingly be comprised of earnings development, dividends, and valuation a number of compression. Because of natural development and acquisitions, we really feel that an anticipated EPS development fee of 8% per yr is sustainable.

The inventory has a present dividend yield of three.5%. Based mostly on this, complete returns would attain roughly -1.4% per yr, consisting of earnings development, dividends, and valuation a number of compression. This can be a unfavourable anticipated fee of return, which means Stanley Black & Decker inventory has a promote suggestion.

Remaining Ideas

Stanley Black & Decker isn’t a high-yield inventory, however it has the entire qualities of a powerful dividend development inventory. It has a high place in its trade, robust money circulate, and sturdy aggressive benefits.

The corporate’s optimistic development outlook bodes nicely for the dividend. The inventory seems overvalued as we speak. Moreover, Stanley Black & Decker will very seemingly proceed to hike its dividend every year for the foreseeable future.

Because the inventory is predicted to supply unfavourable annualized complete returns over the subsequent 5 years, Stanley Black & Decker inventory stays a promote for long-term dividend development buyers.

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

Should you’re in search of shares with distinctive dividend traits, think about the next Certain Dividend databases:

The foremost 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: