Stanley Black & Decker (SWK) is a leading manufacturer of hand tools, home security systems, industrial solutions and general hardware. In the following analyze out loud video I will illustrate that this Dividend Aristocrat has generated an above-average record of operating growth. As a result, the company has also produced dividend growth averaging 5.8% per annum since 1999.
Moreover, Stanley Black & Decker was an overvalued Dividend Aristocrat in 2015, 2016 and 2017. However, since the beginning of 2018, the company’s stock price has fallen roughly 20%. Although this has created a better value than we’ve seen in several years, I do think the stock remains moderately overvalued. On the other hand, if the company meets future expectations and the market values the stock at historical norms, then Stanley Black & Decker would represent an attractive dividend growth stock at current levels.
Therefore, in the following video I will take a by the numbers look at Stanley Black & Decker, to include a resurgence in earnings growth that has transpired since the beginning of 2013. Growth over this timeframe has been better than the long-term historical average which likely explains why it became overvalued the last couple years, and perhaps why its current valuation might make economic sense today.
Summary and Conclusions
I believe that Stanley Black & Decker is a Dividend Aristocrat offering the potential for above-average total return over the next several years. Although the current dividend yield is moderate, its expected operating growth should also translate into continuous dividend growth. I see the stock as a fairly valued long-term investment opportunity with an above-average total return potential through a combination of sound valuation, dividend growth and capital appreciation.
Disclosure: Long SWK
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