Get 3.6% yield as Stanley Black & Decker’s earnings rebound despite a revenue decline

Recent challenges haven’t dented Stanley Black & Decker’s financial robustness. The company raised its quarterly dividend by 1.3% with the September 2023 payment, marking the 56th consecutive year of dividend increases.

Furthermore, the company announced a restructuring plan in 2022. This will include closing factories and reducing the number of products it makes.

Meanwhile the stock trades at 22.1 times the company’s 2024 earnings forecast.

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STANLEY BLACK & DECKER INC. (New York symbol SWK; www.stanleyblackanddecker.com) is one of the world’s largest makers of hand and power tools. In addition to Stanley and Black & Decker, if also offers top-selling brands DeWalt, Lenox, Irwin and Craftsman.

Stanley’s sales jumped during COVID-19 lockdowns as consumers focused on home improvement projects. However, sales have weakened as the economy re-opened. Higher costs for steel and other inputs have also hurt earnings.

Under its new turnaround plan, Stanley is shifting its focus to its main building products operations. As a result, the company is looking to sell its International Equipment Solutions Attachment Group (IES). That business makes products, such as buckets, that attach to big trucks and tractors for off-highway construction.

Stanley paid $690 million for IES in 2018. To put that in context, its current market cap is $14.0 billion.

Value Stocks: Dividend increases should keep on coming for Stanley Black & Decker

With the September 2023 payment, the company raised your quarterly dividend by 1.3%, to $0.81 a share from $0.80. The new annual rate of $3.24 a share yields 3.6%. Stanley has now raised the dividend each year for the past 56 years.

In 2022, the company announced a restructuring plan, including closing factories and shrinking the number of products it makes. The company expects to achieve $1.5 billion in annual cost savings from this plan by the end of 2024, rising to $2.0 billion by the end of 2025. Those savings should let Stanley keep raising your dividend.

In the fourth quarter, ended December 31, 2023, Stanley’s revenue declined 6.3%, to $3.74 billion from $3.99 billion. Revenue was lower for both its Tools & Outdoor, and Industrial segments.

Excluding one-time items, the company earned $0.92 a share, which is a big improvement over the year-earlier loss of $0.10 a share.

Recommendation in Dividend Advisor: Stanley Black & Decker Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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