3 Dividend-Paying Industrial Stocks to Buy Right Now

Buying and holding shares of competitively positioned businesses is one of the best ways to build dividend income for the long haul. These companies generate more cash than they need to run the business, which supports steady (and often rising) dividend payments.

Stanley Black & Decker (NYSE: SWK), FedEx (NYSE: FDX), and Illinois Tool Works (NYSE: ITW) have paid dividends for years and currently offer attractive combinations of yield, safety, and growth. Here's why they can make income investments that pay off.

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1. Stanley Black & Decker

Stanley Black & Decker's competitive advantage starts with its top brands, including DeWalt, Stanley, and Craftsman. Over the last year, it produced $1.3 billion in free cash flow on $15.3 billion in revenue. The company has increased its dividend for more than 50 consecutive years, making it one of the elite Dividend Kings.

The quarterly dividend is currently $0.84 per share, putting the stock's forward dividend yield at 3.5%. Over the last five years, it has grown the dividend at a 3.5% annualized rate. That's not a lot of growth, but the company is also only paying out 39% of its free cash flow to fund the dividend, leaving room to sustain and raise the payout even in a recession.

The recent housing slump has weighed on results, but the business is starting to show progress in a weak environment. Organic revenue rose 3% year over year in the second quarter, led by strength in power tools that helped offset declines in outdoor products.

Just as important, management is working to lift margins -- and that's showing up in the numbers. Adjusted EBITDA (earnings before taxes, interest, depreciation, and amortization) margin hit 11.3% in the quarter, up 320 basis points from a year ago.

If those improvements hold, the company could deliver higher free cash flow once the housing market turns and revenue rises. Demand may remain soft in the near term, but Stanley's long record of dividend increases shows it has navigated multiple cycles while continuing to reward shareholders with rising income.

2. FedEx

FedEx has paid a growing dividend for many years, though it doesn't have as long a streak as Stanley. With a quarterly dividend of $1.22 per share, the stock offers a forward yield of about 1.5%, but it makes up for the lower yield with faster dividend growth.

The company has raised its dividend at a 17% annualized rate over the last five years, and it pays out just 27% of its free cash flow. That gives the company flexibility to keep increasing the dividend over time, even if the economy weakens.

FedEx has faced rising competition from Amazon, but it's still holding its own. Its edge is a global network built for speed, including premium and time-definite delivery that many shippers still rely on. The company's network -- aircraft, hubs, and last-mile infrastructure -- connects much of the world economy.

The company is expanding into higher-value opportunities, including shipments for the healthcare and data center markets. It exited fiscal 2026 (ending in May) with nearly $10 billion in health transportation revenue, while its data center-related revenue nearly doubled year over year.

With guidance calling for roughly 11% revenue growth in calendar 2026, FedEx is experiencing healthy growth. For income investors, the combination of dividend growth, conservative payout, and improving outlook makes it a solid dividend stock to consider buying now.

3. Illinois Tool Works

Illinois Tool Works is another Dividend King worth considering right now. It pays a quarterly dividend of $1.72 per share, or $6.88 annualized, which brings its forward yield to about 2.5%.

It also has the highest payout ratio of the three, returning 62% of free cash flow to shareholders. That's higher, but it fits the profile of a mature, highly profitable industrial business.

Illinois Tool Works focuses on specialized products valued for performance, including auto fasteners, test equipment, and welding systems. That strategy supports pricing power and consistently strong margins.

The company typically reports a high operating margin, which came to 26.7% in Q2. Organic revenue rose 4.5% year over year, led by strength in welding and testing equipment.

Free cash flow jumped 41% from the year-ago quarter. ITW has grown its dividend by about 7% annually over the last five years, and management still sees room to expand margins further -- an important lever for sustaining free cash flow and supporting future dividend increases.

John Ballard has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends FedEx and Illinois Tool Works. The Motley Fool has a disclosure policy.