The article highlights Stanley Black & Decker (SWK) and Bath & Body Works (BBWI) as attractive dividend-paying stocks with distinct growth strategies. Stanley Black & Decker, offering a 4.5% dividend yield and a long history of payments, is focused on margin expansion through a program targeting $2 billion in pre-tax cost savings by 2025, having already achieved $1.8 billion. Bath & Body Works, with a 3.1% yield, aims for significant top-line growth by expanding internationally, developing new product categories, and enhancing digital sales, diversifying from its current 95% North American sales concentration.
If you're an income investor, or just a fan of highly valuable dividend-paying stocks, and are looking for a couple of companies with a 3%+ dividend yield, upside in their businesses, and brands you can trust, you're in the right place. Here are two excellent options that provide potential investors just that. Improving margins will fuel dividend Stanley Black & Decker (SWK -1.42%) is a worldwide leader in Tools and Outdoor products that include power tools, hand tools, storage, digital jobsite solutions, and outdoor lifestyle products. The company operates manufacturing facilities across the globe and boasts impressive brands such as DEWALT, CRAFTSMAN, BLACK+DECKER, and STANLEY, among others. One of the bright spots for owning shares of the power tools producer is its dividend. Over the summer, its Board of Directors approved a modest $0.01 increase of its quarterly cash dividend to $0.83 per common share, or a dividend-yield of 4.5%. It also extends the company's record for the longest consecutive annual and quarterly dividend payments among industrial companies listed on the New York Stock Exchange. The good news is that for investors banking on not only its high-dividend yield, but its also potential, the company's current focus will improve margins. This should eventually trickle down into an increased dividend. NYSE: SWK Key Data Points Stanley Black & Decker's former President and CEO, Donald Allan, Jr., said in a press release, "Supporting our long-standing cash dividend is a key element of our overall shareholder value proposition. This signals our confidence that we are building a Company and culture geared to deliver long-term organic growth and margin expansion as well as generate significant free cash flow to enhance shareholder return." One way management is supporting dividends is through a series of initiatives expected to generate $2 billion of pre-tax run-rate cost savings by the end of 2025. The long-term adjusted gross margin target is an enticing 35%+. Since the beginning of the program in mid-2022, it's generated roughly $1.8 billion in pre-tax run-rate cost savings already. Multiple routes to expansion Bath & Body Works (BBWI 2.12%) is a specialty home fragrance and fragrant body care retailer operating with the brands Bath & Body Works, C.O. Bigelow, and White Barn. Not only does the specialty retailer offer a respectable dividend yield of 3.1%, there is immense growth potential for the company and its investors through store upgrades, digital opportunities, international expansion, as well as adjacent categories such as hair, lip, and laundry. There is plenty of upside remaining in BBW's business that should power its top line well beyond its 2024 $7.3 billion level. The specialty retailer has a compelling product pipeline that should not only drive sales higher but reach new consumers. BBW could add low-hanging fruit business with expansion products that include shaving and facial care, but it could enter nascent categories such as haircare and men's care. Beyond its potential production line expansion, the company has ample opportunity outside of its core U.S. market. In fact, for fiscal 2024, the company generated a vast majority of its sales from North America with only a paltry 5% of sales coming from international markets -- something the company plans to change. NYSE: BBWI Key Data Points The company already touches markets from Dubai, to Italy, all the way back to Mexico, and it just celebrated the opening of its 500th international store in London just last year, marking a stepping stone in the company's global growth strategy. In fact, Morningstar forecasts average sales growth of 3% from its North American stores, 3% from its digital e-commerce, and 5% from its international expansion. Are they buys today? Investors looking for rock-solid dividend stocks that also have upside potential in their business can certainly add Stanley Black & Decker and Bath & Body Works to their watchlists. Stanley Black & Decker has a lengthy history of delivering dividends and dividend increases, while it is also working to boost its bottom line through cost-cutting initiatives. Meanwhile, Bath & Body Works may lack the dividend history of Black & Decker, it doesn't lack for opportunities. Not only does the company have nascent categories that make perfect sense under its umbrella of brands, it has immense untapped market potential globally -- both should power the company's business moving forward. Stanley Black & Decker (SWK) presents as a compelling dividend play, offering a 4.5% yield and boasting the longest consecutive dividend payment record among NYSE industrial companies, underscored by a recent $0.01 per share increase to $0.83 quarterly. Management's confidence in sustaining and potentially increasing this dividend is supported by a robust cost-saving initiative targeting $2 billion in pre-tax run-rate savings by 2025, with $1.8 billion already achieved since mid-2022. This program aims to expand the long-term adjusted gross margin to over 35%, signaling strong operational leverage. Bath & Body Works (BBWI) offers a 3.1% dividend yield alongside significant growth potential driven by strategic expansion initiatives. The company plans to diversify beyond its 95% North American sales concentration through international market penetration, evidenced by its 500th international store opening and Morningstar's forecast of 5% international sales growth. Furthermore, BBWI is exploring new product categories like haircare, men's care, and shaving, which are expected to power top-line growth beyond the 2024 $7.3 billion level. The overall sentiment for both companies is strongly positive (0.8 score), indicating analyst optimism regarding their respective strategies for shareholder value creation and operational improvement. SWK's focus on margin expansion through cost-cutting directly supports its dividend strength, while BBWI's multi-faceted growth avenues provide upside beyond its current core business.
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strongly positive
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