I finally managed to open an account with a new broker (Interactive Brokers) this week and didn’t wait long to employ my cash. On the 14th of November, I initiated a position in Illinois Tool Works (ITW) which was one of the companies I covered in my recent watchlist. This company has been a popular target of dividend investors recently. In case you are not familiar with the company, here is a brief description:
Illinois Tool Works Inc. manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products. The company distributes its products directly to industrial manufacturers, as well as through independent distributors. Illinois Tool Works Inc. was founded in 1912 and is headquartered in Glenview, Illinois.
I like how diversified its business is and how easy it is to understand where they earn money. And the fact that the company raised their dividend for 54 years (!) in a row shows how good the company is for dividend investors in the long run.
With their earnings growth slowing down recently, the share price declined by ~15% from the same time last year. I think this presented a good enough opportunity to purchase some shares of this dividend aristocrat. Hopefully, they will be able to continue their dividend increases for a foreseeable future.
Purchase summary
I bought 8 shares of ITW @$134.37/share (+$1.00 commissions) for a total of $1075.96.
This transaction enlightened me how bad my previous broker was. First of all, they were ripping me off when exchanging currency (from EUR to USD). The spread between buying/selling EUR was ~3,5-4% which is ~$40 when converting €1000 to USD at the moment. With Interactive Brokers, I had to pay €2 fee for the exchange but the spread was virtually 0%. On top of that, I would have paid $9.95 in commissions instead of $1. Finally, I would pay 30% tax on dividends from US companies in my previous broker compared to 15% with the new one. I am really happy with the switch.
With the annual dividend of $4.00/share, this purchase will increase my forward dividend income by $27.20 (after 15% tax). Another nice thing is that ITW pays their dividend during the first month of the quarter which is the slowest month for me and most dividend investors. This means that I will receive more than $10 from dividends each month going forward!
What do you think about this purchase? Do you have ITW in your portfolio? What was your most recent buy? Don’t hesitate to leave your comments below!
Nice purchase, and sounds like an even better—and more lucrative—switch in brokers. I don’t currently hold ITW but I know it has been quite popular across the DGI community. I think you’ll be happy with this purchase!
Hi DivvyDad,
Thanks, I definitely hope I will be happy with it. You were busy building up another positions in your portfolio recently. Let’s see if ITW is going to find place in your portfolio as well one day 🙂
Nice jucy buy BI 🙂 Looks like your accelerating your investments 😉 And you make me thinking to switch my broker :/ US tax and better investments options. I cant buy IWT with my present broker 🙁
Hi P2035,
Thanks for the comment! Yes, we are trying to save and invest as much as possible at the moment. There may come time when I won’t be able to save as much (when our baby-girl grows and additional expenses come up) so I am doing my best now 🙂
Regarding the broker switch, none of the companies in my recent watchlist were available in my previous broker (SEB). It was one of the reasons why I switched and after switching I found even more advantages with the new broker compared to SEB. We don’t have much choice yet in Lithuania but there are some options now.
Same stuf here 😀 Just that we “invested” in a kitchen.
I like it. ITW has a place in my portfolio too and you were able to get it for a slightly better price.
Good luck with it.
Hi Druss,
Thanks for the comment! I actually was a little bit disappointed in myself with my impatience. I could have gotten it for ~$1/share less if I was more patient 🙂
Great buy! I would like to buy ITW too but don’t have any money for investing at the moment. Oh well, just gotta hope the price doesn’t increase too much before that!
Hey Dividend Deluge! Thanks for visiting!
I feel you 🙂 There are quite a few companies that I would like to buy some shares of if I had some funds 🙂 I learned that there are always some opportunities when you eventually have some funds to invest, thoug, so I wouldn’t worry if ITW is no longer attractive then 🙂
Hi BI!
I recently found your blog and really like it!
Are you investing directly via Interactive Brokers or through some their local partner? Is 10 USD inactivity fee applied if there were no transactions during month?
Hi Hardbit,
Thanks for the nice words! I’m glad you like it!
I am using a local partner (Myriad Trading). The 10 USD inactivity fee doesn’t apply yet but it is not certain if it will not change in the future. However, the fees are higher than investing directly via Interactive Brokers. Only this first trade cost $1, other purchases I made in US cost me $7. But it’s still better than pay the minimum monthly $10 fee, as I only make one purchase in a month at most.
Are you also investing or planning to start? 🙂
Most of my investments are currently P2P based and I am starting to look at alternatives. I was looking at SEB, but their fees look way too high for me and they also do nothing to help reduce 30% US dividend tax. By the way, have you solved that tax issue with your current broker?
The old/current broker I was referring to is actually SEB 🙂 One more thing that I don’t like there is that you are not able to invest to some stocks, they are just not in the list (e.g. ITW). Most of my old investments are still there but I am planning to move them over gradually.