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.
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!