Last Update 3/10/25
ITT Inc. (NYSE: ITT) is a well-established industrial company with a rich history dating back over a century. The company specializes in manufacturing engineered components and technology solutions, serving industries like transportation, energy, and water infrastructure.
With a market cap hovering around $11.3 billion, ITT is a sizable player in the industrial space. While it may not be a high-yield dividend stock, it offers a steady income stream with a strong track record of financial stability. For investors looking for reliability over sky-high yields, ITT presents an intriguing opportunity.
Key Dividend Metrics
📈 Dividend Yield: 1.01%
💰 Annual Dividend: $1.40 per share
🔄 5-Year Average Dividend Yield: 1.04%
📅 Ex-Dividend Date: March 6, 2025
📆 Next Dividend Payment: March 31, 2025
📊 Payout Ratio: 20.25% (Indicating strong coverage)
🚀 Dividend Growth: Steady annual increases
Dividend Overview
ITT’s dividend yield sits at 1.01%, which is right in line with its five-year average. While that’s not particularly high, it’s a sustainable payout supported by strong earnings. Some investors might prefer stocks with a higher yield, but ITT compensates with solid dividend growth and financial health.
A major plus is the company’s conservative payout ratio. At just over 20%, ITT is keeping plenty of cash for reinvestment, ensuring future dividend increases and business expansion. This balance between shareholder returns and reinvestment is a good sign for long-term investors.
Compared to industrial sector peers, ITT’s dividend yield is on the lower end. However, its consistency and ability to grow the dividend make it appealing to those prioritizing stability over immediate income.
Dividend Growth and Safety
ITT has a reputation for delivering consistent dividend increases, which is critical for investors who rely on dividends for passive income. The company’s financial discipline supports this growth, making future hikes likely.
Why ITT’s dividend is safe:
✅ Low payout ratio – With only 20.25% of earnings allocated to dividends, there’s plenty of room for growth.
✅ Earnings strength – ITT’s forward P/E ratio of 21.74 reflects stable earnings, while quarterly earnings have surged 38.8% year-over-year.
✅ Strong cash flow – With $562 million in operating cash flow and $407 million in free cash flow, ITT can easily cover dividends.
✅ Business stability – Despite being in a cyclical industry, ITT’s diversified operations help smooth out economic swings.
ITT doesn’t quite have the pedigree of a Dividend Aristocrat, but it has consistently increased payouts while maintaining a healthy financial position.
Chart Analysis
Trend Overview
ITT Inc.’s stock has seen a strong uptrend for most of the past year, but momentum appears to be shifting. The price reached a peak near $160 before pulling back and breaking below the 50-day moving average. This suggests that the shorter-term trend has weakened. The 200-day moving average, which often acts as long-term support, is now being tested, making this a critical level to watch.
Moving Averages
The 50-day moving average is now sloping downward, indicating that the stock is losing its recent upward momentum. The fact that the price has dropped below this level and struggled to reclaim it suggests a potential shift in sentiment. Meanwhile, the 200-day moving average continues to trend upward, signaling that the long-term uptrend is still intact, but the stock is at a make-or-break point. If the price continues to hover around this level or drops further, it could signal a deeper pullback.
Volume and Market Participation
Volume levels have been relatively steady, but there have been some notable spikes on down days, indicating increased selling pressure. This is something to monitor closely, as sustained high selling volume near a support level could lead to a breakdown. Conversely, a bounce off the 200-day moving average on strong volume would signal renewed buying interest.
RSI and Momentum
The Relative Strength Index (RSI) has been in a steady decline for the past few months, indicating that momentum has been fading. The RSI is now hovering near the oversold threshold but hasn’t quite reached extreme levels. If it continues to stabilize and turn higher, it could suggest that selling pressure is easing. However, if it remains weak, it could point to further downside.
Recent Price Action
The last five candles have shown some volatility, with price swings in both directions. The most recent candle shows a modest recovery from intraday lows, suggesting some buying interest at current levels. However, the prior candles indicate that sellers have been in control for most of the recent trading sessions. If the stock can reclaim the 50-day moving average, it could signal renewed strength, but failure to do so could lead to further declines.
Analyst Ratings
📈 Upgrades:
Several analysts have expressed optimism about ITT’s prospects. 🔹 UBS raised its price target for ITT from $165 to $168, maintaining a buy rating. This suggests confidence in ITT’s growth trajectory and market position. 🔹 KeyBanc also increased its price target from $164 to $170, reiterating an overweight rating. These upgrades reflect a positive outlook on ITT’s ability to sustain growth and deliver strong earnings performance.
📉 Downgrades:
On the other hand, some analysts have taken a more cautious stance. 🔸 StockNews.com adjusted its rating from buy to hold, signaling a neutral stance on ITT’s near-term prospects. 🔸 Citigroup slightly lowered its price target from $183 to $181 but maintained a buy rating, suggesting that while long-term potential remains strong, there may be some short-term headwinds.
🎯 Consensus Price Target:
The consensus among analysts points to a favorable outlook for ITT. The average 12-month price target is $168.38, with estimates ranging between $155 and $181. This implies an upside potential of approximately 21% from the current stock price, reflecting overall confidence in ITT’s growth strategy and market position.
These varying perspectives highlight both optimism and caution, giving investors a well-rounded view of ITT’s future trajectory.
Earnings Report Summary
ITT Inc. wrapped up the fourth quarter of 2024 on a strong note, delivering solid earnings and revenue growth. The company reported earnings per share (EPS) of $1.55, with adjusted EPS coming in at $1.50. For the full year, ITT posted an EPS of $6.30, with an adjusted figure of $5.86, showing steady financial strength.
Revenue jumped 11% in the quarter, with organic growth contributing 7% to that number. Orders were also up 10%, leading to a backlog of $1.6 billion—an impressive 34% increase from the prior year. The momentum was fueled by increased demand for ITT’s pump projects, rail components, and industrial connectors.
Operating income climbed 45% to $207.9 million, thanks in part to a $48 million gain from the sale of Wolverine Advanced Materials. Even without that boost, adjusted operating income still saw an 11% increase, reaching $161.6 million. Margins also improved, with the operating margin expanding by 610 basis points to 23.5%, and the adjusted operating margin rising by 60 basis points to 18.3%. These gains came from higher sales volume, effective pricing, and improved productivity.
EPS saw a significant jump, rising 46% year-over-year to $1.96, helped by the Wolverine divestiture gain. Adjusted EPS also increased 7% to $1.46, thanks to higher operating income, though rising interest expenses from recent acquisitions slightly offset that growth.
Cash flow was a bit of a mixed bag. Operating cash flow dropped 27% to $123.9 million, mainly due to higher working capital needs. Free cash flow also dipped 41% to $87.3 million. For the full year, operating cash flow was down by $28 million, while free cash flow decreased by $47 million. These declines were driven by capital expenditures, interest payments, and increased working capital, despite strong earnings performance.
Management was upbeat about the company’s trajectory, highlighting strong growth in its short-cycle flow businesses, continued momentum in Friction, and increased market share in rail. With orders growing at a double-digit rate, ITT finished the quarter with a record $1.7 billion backlog.
As a reward for shareholders, the company announced a 10% increase in its quarterly dividend to $0.319 per share, marking the third straight year of dividend hikes. The new payout will be distributed at the end of December.
Looking ahead, ITT is projecting revenue growth of 10% to 12% for 2024, with organic growth expected to land between 5% and 7%. Margins are also set to improve, with operating margins forecasted between 18.4% and 18.7%. Full-year EPS is estimated to come in between $6.16 and $6.22, reflecting a solid 11% to 12% increase from last year. Free cash flow is expected to be around $450 million, representing a 12% free cash flow margin.
With a strong backlog and steady growth in key business segments, ITT appears to be in a solid position heading into the new year.
Financial Health and Stability
A strong balance sheet is essential for dividend reliability, and ITT checks the right boxes. The company maintains a current ratio of 1.40, meaning it has sufficient short-term liquidity. Debt levels are also manageable, with a debt-to-equity ratio of 27.31%, which is relatively low for an industrial firm.
Other key financial highlights:
- Revenue growth of 12% year-over-year, reflecting strong demand for ITT’s products.
- A profit margin of 14.27%, which is healthy for an industrial company.
- A return on equity (ROE) of 19.66%, showing efficient use of capital.
ITT’s ability to generate strong earnings and cash flow suggests it can continue paying dividends without issue. This kind of financial discipline gives income investors confidence in the company’s ability to sustain payouts.
Valuation and Stock Performance
ITT’s stock price currently sits at $134.88, experiencing a 2.75% decline for the day. Over the past year, shares have traded between $121.01 and $161.13, meaning it remains within a reasonable range.
Looking at valuation metrics:
- A trailing price-to-earnings (P/E) ratio of 22.01 and a forward P/E of 21.74 indicate that ITT is fairly priced for its earnings potential.
- A price-to-sales (P/S) ratio of 3.14 suggests it’s trading at a reasonable multiple relative to revenue.
- A PEG ratio of 1.67 implies a fair valuation when considering earnings growth expectations.
ITT isn’t a screaming bargain, but it also doesn’t appear overvalued. The stock is currently trading below its 50-day moving average of $145.04 and its 200-day moving average of $141.77, which could indicate a short-term buying opportunity for long-term investors.
Despite some recent volatility, ITT has the potential to deliver both capital appreciation and dividend growth over time.
Risks and Considerations
Like any investment, ITT comes with risks that dividend investors should be aware of.
🔻 Lower yield – At just over 1%, ITT’s yield may not be attractive to those seeking high-income payouts.
🔻 Cyclicality – As an industrial company, ITT’s revenue is influenced by economic cycles. A downturn in manufacturing or infrastructure spending could impact earnings.
🔻 Stock price fluctuations – With a beta of 1.43, ITT’s stock can be more volatile than the broader market.
🔻 Industry competition – ITT operates in a competitive landscape, facing pressure from larger industrial firms.
While these risks are worth considering, ITT’s strong financial position and track record of execution help offset them.
Final Thoughts
ITT Inc. may not be a high-yield dividend stock, but it offers reliability, financial strength, and steady dividend growth. With a low payout ratio and strong cash flow, there’s ample room for future dividend hikes.
For investors who prioritize safety and long-term growth over immediate income, ITT stands out as a solid choice. It won’t be the highest-yielding stock in a portfolio, but its combination of stability and dividend consistency makes it a compelling option for those looking to build wealth over time.
While the stock’s recent dip presents a potential buying opportunity, investors should consider their personal risk tolerance and long-term objectives before making any decisions.
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