Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

General Electric Company (GE), Illinois Tool Works Inc. (ITW): Good Dividends in Diversified Machinery

General Electric CompanyMachinery companies are some of the cornerstones of our economy. They produce what we use every day, help our police and military to keep us safe and provide potentially awesome returns to us shareholders. But in my opinion, the best returns are solid dividends that I can reinvest over the long term.

Storied history

General Electric Company (NYSE:GE) is a massive company with a storied history and a high ranking for gross revenue and profits. With a $230 billion market cap and 9.6% margins on $146 billion in revenue, GE looks pretty solid overall. And the current dividend payment of $0.19/share as of February is near the low end of General Electric Company (NYSE:GE)’s past 15 years of dividends. Since the dividends have been consistent for over a century, that’s a great sign.

Of course, not everything is coming up roses with General Electric Company (NYSE:GE). The company dropped its dividend considerably during the panic of 2008, and has only modestly risen it despite laying off a considerable portion of its American workforce and not paying any taxes on its considerable profits during 2010.

Since the record shows General Electric Company (NYSE:GE)’s top executives received 27% average pay raises during the same period in which the company wasn’t paying taxes and cut its dividend down to 2002 levels, it seems General Electric Company (NYSE:GE) would rather benefit its top employees than its investors, meaning the company isn’t the best idea for satisfying your dividend needs.

Emissions threat

Illinois Tool Works Inc. (NYSE:ITW) is a patent-rich Fortune 200 company that has a booming business in 58 countries. Also, Illinois Tool Works Inc. (NYSE:ITW) has paid 25 dividends over the past 20 quarters and shown steady growth. A growing dividend that is covered by profits tends to be a sign of security and a commitment to rewarding shareholders. In addition, Illinois Tool Works Inc. (NYSE:ITW) has shown a solid environmental commitment by having volunteers from within its ranks develop methods it has used to cut down emissions considerably.

However, the emissions level still ranks Illinois Tool Works Inc. (NYSE:ITW) within the top 100 airborne polluters in the US. As well, the company has been cited as recently as the year 2000 for illegally exporting chemicals without proper licensing and even falsifying shipping documents.

While the fines from these operations are no longer weighing on the balance sheet, a company that is willing to break laws in the course of its operation may not have investor interests at heart. You might consider when pondering Illinois Tool Works Inc. (NYSE:ITW)’ 2.4% dividend how much it will have to be cut to fund legal defenses if the Feds catch the company perpetrating any more shady activities.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.