Consider These Highly Profitable, Dividend-Paying Industrials: 3M Co. (MMM), Illinois Tool Works Inc. (ITW)

One more for the road

Fellow global industrial manufacturer Illinois Tool Works Inc. (NYSE:ITW) celebrated its 100^th anniversary last year. To celebrate the occasion, the company provided investors with a 6% dividend increase to its current level of $1.52 per share annualized, representing a current yield near 2.5% for new investors.

Illinois Tool Works Inc. (NYSE:ITW) reported fourth-quarter earnings per share from continuing operations of $2.10, up significantly from $.90 the year prior. In addition, diluted earnings per share for the full-year soared 45% to $6.06, as a result of lower expenses and a reduced number of shares outstanding.

Going forward, investors can expect good things to come from Illinois Tool Works. The company is targeting 2013 full-year revenue growth of 3% to 5% year over year. The company is a solid free cash flow generator, having produced $1.7 billion in free cash flow last year. As a result, it’s likely the company will provide investors another dividend increase later this year.

Manufacture yourself solid gains

Each of these stocks operates as an industrial, and as a result, is closely tied to the global economy. These stocks will suffer from economic downturns both in the United States and abroad, as was clearly evident during the 2008 recession. At the same time, they will also benefit from the ensuing global economic recovery that continues its gradual pace.

None of these stocks are over-priced, as indicated by reasonable price-to-earnings ratios that are comparable to the valuation on the S&P 500. 3M Co. (NYSE:MMM), Dover, and Illinois Tool Works Inc. (NYSE:ITW) trade for P/E ratios in the mid-teens. In addition, they offer solid dividend yields of between 2% and 3% annualized that can provide your investment a dose of stability. Each of these companies is in great financial condition and has the potential to offer your portfolio the best of both worlds, namely the unbeatable combination of capital gains and dividends.

The article Consider These Highly Profitable, Dividend-Paying Industrials originally appeared on Fool.com and is written by Robert Ciura.

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