ITW valuation is too high relative to its slow growth; keep on watchlist but do not buy at current price.

Now, we come to ITW, Illinois Tool Works, which had a very respectable dividend increase of close to 7%. And if we look at them in the last year, yes, there's been a lot of volatility.

A huge run-up you can see in early February, a bit of a pullback, but it's since recovered those gains, up about 11.2% and year-to-date up 17.14%.

So, let's jump over to the dividend breakdown sheet. What you'll see is a starting yield sitting at 2.23% and the payout ratio is reasonable with the free cash flow one sitting at about 66% and a nice history of dividend growth.

And the recent dividend increase is pretty much in line with what we've seen over the last 5 years, about 6.4%. Now, we do need to point out that free cash flow growth has been relatively slow over the last few years.

So, really, all this dividend growth is going to result in an increased free cash flow payout ratio. So, it's only fair that we point that out.

Now, with that being said, you do need to understand the business model. ITW essentially operates hundreds of specialized businesses, but it primarily comes down to seven different segments. It's basically a diversified manufacturer.

If we look at earnings estimates over the next few years, what you'll notice is it's sitting in the 7 8 to 9% range, which historically speaking has been relatively close to what they've done.

And so, if we look at the valuation multiple for this stock, it's trading pretty much in line with what we've seen historically speaking, but we must point out that's a bit of a premium for a stock that seen very slow free cash flow and earnings growth, particularly over the last few years.

Now, there's certainly been a shift to more value-oriented opportunities in 2026. And I do think ITW has been somewhat of a beneficiary from that. So, for me personally, that PE multiple is a bit rich for what I'd be willing to pay for this stock, but certainly a company to have on your watch list.