Some companies offer the option of automatic Dividend Reinvestment Plans DRIPs to their shareholders. In other words, their shareholders can choose to receive their dividends in shares instead of cash. These plans have significant advantages, as they are usually free of commissions and help investors maximize the benefit from compounding their income streams.
In addition, it prevents investors from making emotional mistakes, such as avoiding to purchase shares during bear markets, when the market sentiment is negative.
Let’s discuss the prospects of three dividend growth stocks that offer DRIP plans.
This ‘King’ Provides the Tools You Need
Illinois Tool Works (ITW) is a diversified multi-industrial manufacturer with seven unique operating segments: Automotive, Food Equipment, Test & Measurement, Welding, Polymers & Fluids, Construction Products and Specialty Products. It generates more than half of its sales from international markets.
Illinois Tool Works is characterized by exemplary management, which invests great amounts on R&D year after year. As a result, the company has developed a broad portfolio of industrial products and has exhibited an exceptional performance record. Despite the inevitable cyclicality in its business, the industrial manufacturer has grown its earnings per share in seven of the last nine years, at an 8.5% average annual rate.
Moreover, Illinois Tool Works enjoys strong business momentum right now. It incurred a 14% decrease in its earnings per share in 2020 due to the unprecedented lockdowns caused by the pandemic, but it recovered strongly in 2021, with record EPS of $8.51, which were 10% higher than the pre-pandemic EPS of the company.
In the third quarter of 2022, the company grew its revenue 13% over the prior year’s quarter thanks to double-digit growth in five of its seven segments. As a result, it grew its EPS 16%, from $2.02 to $2.35, and exceeded the analysts’ estimates by $0.10. It has exceeded the analysts’ consensus in 12 of the last 13 quarters and is on track to grow its EPS by about 11% this year, to…
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