Stanley Black & Decker (SWK) has paid its dividend for 139 consecutive years and increased it for the past 48 consecutive years. In two years, SWK will join the exclusive dividend kings list, which consists of companies that have raised their dividend for at least 50 straight years.

These businesses are rare and typically possess numerous competitive advantages. In the case of SWK, the stock has also sold off by 15% since mid-December 2015 and trades at about 15x forward earnings, making the investment case even timelier for consideration in our Top 20 Dividend Stocks portfolio.

Business Overview

SWK was founded in 1843 and has grown into a diversified global provider of power and hand tools, products and services for various industrial applications, and security systems. The company sells over 500,000 products including power drills, saws, toolboxes, wrenches, fasteners, measuring tools, compressors, nail guns, outdoor power equipment, sanders, lamps, mowers, vacuums, workbenches, polishers, grinders, cordless tools, air tools, and more. Some of the company’s biggest brands are Stanley, DeWalt, Black+Decker, Porter Cable, and Bostitch.

SWK’s largest end markets by 2014 revenue are residential / repair / DIY (20%), new residential construction (15%), non-residential construction (17%), industrial / electronics (17%), automotive production (8%), and retail (5%).

By segment, SWK generated 62% of its 2014 revenue from Tools & Storage, 20% from Security, and 18% from Industrial.

By geography, SWK generated 49% of its 2014 revenue from the U.S., 25% from Europe, 17% from emerging markets, and 9% from the rest of the world.

Business Analysis

SWK’s primary competitive advantages are its strong brands, product innovation, and global distribution channels.

SWK’s brands and reputation for quality were established a long time ago. The company obtained the world’s first patent for a portable power tool in 1916 and has since amassed an unparalleled family of brands, products, and industry expertise. Before going further, it’s worth mentioning that Stanley Works acquired Black & Decker in early 2010 to create the biggest toolmaker in the U.S. This deal combined the leader in consumer and industrial hand tools and security with the leader in power tools.

Today, SWK has over 13,000 active global patents and introduces about 1,000 new tool products per year, including many of the “world’s first” each year. The company has noted that new products drive over 85% of its organic growth, and NPD Data recognized the company for receiving the 8th most patents in the world from 2010-2014 (Source: SWK Investor Presentation).

Innovation is a clear driver for the business, and SWK is able to leverage its brand equity into adjacent product categories for easy expansion. Most of its markets are extremely large and fragmented because they require so many different types of products (e.g. a home remodeling project could require saws, measuring tools, nail guns, vacuums, tools, drills, and more).

SWK can develop or acquire new products where it has gaps and market them under its famous brands. The company invested over $6 billion in acquisitions since 2002 to advance its growth opportunities, and we expect more of the same to continue over the next decade as it continues consolidating its markets.