Smart Dividend Portfolio Edition #84: Steady Torque
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Dear Investor,
Welcome to the 84th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: Oct 27, 2025
Markets ended the week on a strong note, with all major indexes hitting record highs on Friday. The Dow Jones Industrial Average (DJIA) ended the week up 2.20%, the S&P 500 (SPX) gained 1.92%, and the large-cap tech benchmark Nasdaq-100 (NDX) rallied 2.18%.
Stocks surged on Friday, driven by a cooler-than-expected inflation report, which reinforced expectations that the Federal Reserve will continue with rate cuts this year. Gains were also bolstered by strong corporate earnings – notably from Intel (INTC) and Ford (F) – and optimism surrounding the upcoming AI-focused tech earnings week.
Following Tesla’s (TSLA) report last week, five more “Magnificent Seven” giants – Microsoft (MSFT), Alphabet (GOOGL) , Meta Platforms (META) , Apple (AAPL) , and Amazon (AMZN) – are scheduled to release their quarterly results. These results will very likely set the tone for the rest of the tech stocks for the coming weeks, at least until Nvidia’s (NVDA) report in mid-November. Markets are expecting a show of strength, with investors sending the Roundhill Magnificent Seven ETF to a new all-time high.
The White House may have sparked a new leg in the tech rally last week. According to media reports, President Trump’s administration is exploring equity stakes in U.S. quantum‑computing companies as part of a new strategic technology initiative. Bloomberg, Wall Street Journal, and other sources reported that the Trump admin and the U.S. Department of Commerce were in talks with IonQ (IONQ) , Rigetti (RGTI ), D-Wave Quantum (QBTS) , and Quantum Computing (QUBT) about possible government equity stakes valued at a minimum of $10 million per company in exchange for federal funding through the CHIPS R&D Office.
The news triggered a surge across the quantum-tech universe, lifting stocks that were previously under heavy selling pressure. Notably, these small caps are extremely speculative bets, as highlighted by their inclusion in the Roundhill Meme Stock ETF – and they aren’t even its largest holdings. Still, as the cloud and AI rallies demonstrated, the abundance of meme speculation doesn’t mean the underlying tech is not the next big thing, and strong government interest – with funds flowing into the tech – also supports stocks of the firms that may soon see actual quantum profits, such as IBM (IBM ) and Alphabet’s (GOOGL ) Google.
September’s headline CPI rose by 0.3% month-over-month, while Core CPI inched up by 0.2% – both a tad below expectations. The benign data further convinced market participants that the Federal Reserve is about to deliver its second consecutive rate cut at its meeting next week. Moreover, the odds of three cuts this year – including a prospective one in December – jumped to over 85%.
Although the central bank’s September “dot plot” showed that on average, officials supported a rate reduction of 0.75% in total for 2025, policymakers continued to stress their data dependency in making these decisions. With the government shutdown switching off much of the economic releases, investors worried that the Fed may prefer waiting out the data darkness. Now, the CPI has partly dispelled these worries, shining a bright data light – luckily, in the right direction.
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This Week’s Quality Dividend Stock Idea
Snap-on (SNA), headquartered in Kenosha, Wisconsin, is a U.S.-based global manufacturer and marketer of professional-grade tools, equipment, and diagnostic solutions. The company serves technicians and industrial users across automotive, aviation, marine, and heavy equipment markets. It operates through four segments encompassing tools, diagnostics and repair information, industrial solutions, and financial services.
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Forged Evolution
Snap-on traces its roots back to 1920, when Joseph Johnson and William Seidemann revolutionized the automotive service industry by inventing interchangeable socket tools. The company began as a maker of professional-grade tools before evolving into a provider of advanced repair and diagnostic solutions.
During the latter half of the 20th century, Snap-on’s growth accelerated through acquisitions and the development of its unique mobile franchise distribution model, which allowed the company to directly serve technicians at their workplaces. Its Financial Services arm, established in 2001, became an integral part of its franchise financing model.
Over the past decade, Snap-on has pursued a disciplined acquisition strategy to expand its software, diagnostics, and global tool capabilities while maintaining a lean portfolio. Key deals have reinforced both its traditional tool franchise and its growing presence in digital automotive solutions. The 2016 acquisitions of Car-O-Liner and Sturtevant Richmont strengthened its collision repair and torque product lines, followed by Norbar Torque Tools in 2017, which broadened its global torque platform. Subsequent purchases of Cognitran (2019) and AutoCrib (2020) advanced Snap-on’s digital and automated tool management offerings. Its largest deal came in 2021 with the $200 million acquisition of Dealer-FX Group, a Canadian SaaS provider for automotive OEMs and dealerships, marking a major step into service and dealership management technology.
These acquisitions, combined with Snap-on’s Value Creation Processes – focused on safety, quality, innovation, and customer connection – have fueled expansion across its core segments. Supported by consistent cash flow, disciplined capital allocation, and a long dividend record, Snap-on has evolved from a specialized toolmaker into a diversified, high-margin industrial technology leader positioned for sustained earnings growth and shareholder value creation.
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Engineered Resilience
Snap-on operates a diversified, high-margin business model designed to generate steady cash flow across economic cycles. The company earns revenue primarily from the sale of tools and equipment, repair systems and diagnostic software, and financing solutions provided to its customers and franchisees. Its integrated structure, spanning manufacturing, technology, and financial services, creates multiple recurring revenue streams and reinforces operational resilience.
The company’s operations are organized into four segments: the Commercial & Industrial (C&I) Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services. The Tools Group, which contributes roughly 43% of total revenue, remains the company’s core growth engine. It sells hand and power tools, tool storage systems, and shop equipment through a global network of mobile franchise vans that reach professional technicians directly. This unique distribution model fosters brand loyalty, pricing power, and repeat purchases.
The Repair Systems & Information Group (RS&I) complements this business by providing advanced diagnostic tools, shop management software, and OEM dealership solutions. These offerings embed Snap-on’s technology into daily repair operations, creating recurring service and software revenue streams. Meanwhile, the Commercial & Industrial Group extends Snap-on’s reach beyond automotive markets, supplying customized tools, torque systems, and repair solutions to clients in aerospace, energy, and military sectors – industries that benefit from long-term contracts and high switching costs.
Finally, the Financial Services segment strengthens the company’s ecosystem by offering financing options that support product purchases and franchise expansion. This segment consistently generates strong margins and low credit losses, enhancing overall profitability while reinforcing customer and franchise relationships.
Together, these segments form a well-balanced business model that benefits from Snap-on’s operational discipline, pricing strategy, and ongoing investments in connected repair and diagnostic technologies. The result is a company that has succeeded in sustaining profitability, expanding margins, and maintaining robust free cash flow across business cycles.
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Tooling Ahead
Snap-on’s management emphasized that industry fundamentals remain highly favorable, offering a strong backdrop for its tools and diagnostics businesses. Vehicle miles driven are increasing, the average age of vehicles continues to rise, and the growing complexity of automotive systems is driving greater repair demand. Even so, some technicians remain cautious about financing large-ticket purchases amid broader economic uncertainty.
To address this, Snap-on has been promoting “quick payback” products – tools and systems designed to rapidly enhance productivity and income potential. New diagnostic platforms and power tools, for example, help technicians complete more jobs per day, boosting efficiency and earnings soon after purchase. This strategy helps sustain demand even in a cautious spending environment.
The company’s flexible manufacturing and engineering capabilities also provide agility, enabling it to adapt production and capture new opportunities as market conditions evolve. The Repair Systems & Information (RS&I) segment remained a standout performer, benefiting from the ongoing digital transformation of vehicle repair. Shop owners and managers are upgrading to advanced diagnostic and information systems capable of handling complex repairs. Snap-on’s latest diagnostic platforms combine specialized hardware, intuitive software, and access to one of the industry’s most comprehensive repair databases, containing detailed procedures and wiring diagrams that help technicians diagnose and fix issues faster and more accurately. These platforms have earned multiple innovation awards, reinforcing Snap-on’s leadership in repair technology.
The Commercial & Industrial (C&I) segment posted mixed results, with strong demand in aviation and natural resources offset by softness in Asia-Pacific due to supply chain relocations. New product launches, including the TAC2 torque and angle click wrench and an extra-long cordless ratchet, were well received for their advanced performance. The Tools Group also benefited from positive reception to new diagnostic and power tools, reflecting continued interest in high-efficiency products that deliver faster returns on investment.
Recent capacity investments have strengthened Snap-on’s operational agility and product availability, supporting margin gains through improved manufacturing efficiency and a favorable product mix. Franchisees, who form the backbone of Snap-on’s direct-to-technician model, continue to show healthy liquidity and access to financing, allowing them to maintain inventory levels, invest in new products, and extend credit to customers. This financial resilience at the franchisee level suggests steady end-market demand and ongoing stability across the company’s core repair network.
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Measured Strength
Over the past five years, Snap-on has delivered consistent and profitable growth, underscoring the strength of its diversified business model and disciplined execution. Revenues and EPS have grown at a CAGR of 6.1% and 12.3%, respectively, supported by broad-based momentum across its core segments – particularly the Repair Systems & Information (RS&I) Group – as well as ongoing investments in professional tool innovation and digital diagnostic solutions.
In the third quarter of fiscal 2025, the company reported net sales of $1.19 billion, up 3.8% year over year, driven by 3% organic growth that exceeded market expectations. The consolidated gross margin held firm at 50.9%, only slightly below the prior year, reflecting the company’s ability to sustain profitability amid mixed macro conditions. Adjusted diluted earnings per share rose to $4.71, beating analyst estimates and excluding a $0.31 per-share benefit from a legal settlement.
Among business segments, the RS&I Group remained the primary growth driver, with sales rising 8.9% organically to $464.8 million. This performance reflected strong demand for advanced diagnostics and repair information solutions, especially from both OEM dealerships and independent workshops. The Tools Group posted 1% organic growth, supported by active franchisee engagement and successful product introductions, while the Commercial & Industrial segment saw modest results due to ongoing weakness in Asia-Pacific markets. However, gains in critical industries helped offset some of this softness, allowing the segment to maintain a solid gross margin near 41% through disciplined pricing and cost management.
The company’s Financial Services segment generated $101.1 million in revenue and $68.9 million in operating earnings, posting only a slight decline from the prior year as lower loan originations reflected cautious technician spending on large-ticket items.
Operating cash flow for the quarter reached $277.9 million, reflecting strong earnings conversion. Capital expenditures of roughly $20 million supported capacity expansion and innovation, yielding free cash flow of about $257 million – up 10% year over year. The company ended the quarter with $1.53 billion in cash and net debt of just $327 million, underscoring its substantial liquidity and balance sheet strength. With a debt-to-EBITDA ratio of 0.86 – significantly below the industry median of 1.7 – and solid investment-grade credit ratings of “A2” from Moody’s, “A-” from S&P, and “A” from Fitch, Snap-on remains among the financially strongest companies in the industrial sector.
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Dividend Drive
Snap-on has a long and consistent record of rewarding shareholders, supported by its strong cash flow and disciplined capital allocation. The company is a true Dividend King – having paid dividends for more than 80 years and raised them for 16 consecutive years – a rare feat that underscores its financial strength and commitment to long-term investors. Over the past decade, Snap-on’s dividend has grown at an annual rate of roughly 15%, sustained by its solid profitability and steady cash generation.
Currently, the company distributes about 45% of its adjusted earnings to shareholders, offering a dividend yield of 2.49%, which is roughly double the industrial sector’s average of 1.24%. In its most recent quarter, Snap-on declared a quarterly cash dividend of $2.14 per share, translating to an annualized payout of $8.56 per share. Furthermore, the company’s strong return metrics – with ROE, ROA, and ROIC ranked among the top 10% in the industry – highlight its efficiency in generating profits and reinvesting capital.
Alongside dividends, Snap-on has been an active buyer of its own stock. During the third quarter of fiscal 2025, it repurchased $82 million worth of shares and still has approximately $306 million remaining under its current authorization. Over the first nine months of 2025, total repurchases reached $248.2 million. These buybacks not only help offset share dilution but also enhance per-share earnings and reinforce the company’s commitment to shareholder value while preserving flexibility for future strategic investments.
The stock trades at a premium to its historical averages across multiple metrics, including non-GAAP trailing and forward P/E ratios, EV/EBITDA, price-to-book, and price-to-cash flows – reflecting the market’s recognition of its strong fundamentals and consistent execution. This premium can be seen as a vote of trust in Snap-on’s durable business model, pricing power, and its ability to deliver steady earnings growth even in cyclical markets.
Interestingly, despite this upward rerating, Snap-on’s valuation still appears reasonable when viewed against its peers. Compared to toolmaker Stanley Black & Decker and other industry players, Snap-on trades within a low-to-moderate range on non-GAAP trailing and forward P/E as well as forward EV/EBITDA multiples. This relative positioning suggests that while investors are willing to pay for quality and stability, the stock has not yet entered overheated territory.
Overall, analysts remain optimistic about SNA as Snap-on is entering a new phase of growth, powered by its cloud-connected diagnostic platforms that enhance workshop productivity and generate recurring revenue. Supported by continuous product innovation, expanding global reach, and disciplined execution, the company is well-positioned to capture structural demand across both automotive repair and high-precision industries.
Consensus estimates suggest around 9% upside from current levels, with some projections calling for potential gains exceeding 17%. A discounted cash flow (DCF) analysis also indicates that the stock is trading approximately at 25% below its intrinsic value.
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Investing Takeaway
Snap-on stands out as a reliable income-generating stock, supported by its durable business model and consistent cash flow through economic cycles. The company’s long history of uninterrupted and steadily rising dividends reflects both its financial discipline and commitment to rewarding shareholders. Backed by robust free cash flow, strong balance sheet metrics, and industry-leading returns on capital, Snap-on has built one of the most dependable dividend track records in the industrial sector. Its combination of recurring revenues, prudent capital allocation, and ongoing share repurchases provides investors with both stability and compounding potential. For long-term income seekers, Snap-on offers not just yield consistency but also the reassurance of a company whose cash generation and operational strength can support continued dividend growth well into the future.
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Dividend Investor Portfolio
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Portfolio News
▣ Automatic Data Processing (ADP) is set to announce its fiscal Q1 FY26 results on October 29, with markets focused on the company’s ability to sustain growth in its Employer Services and Professional Employer Organization (PEO) segments amid a moderating labor market. Wall Street expects ADP to deliver steady performance, with analysts projecting earnings of $2.44 per share on revenue of $5.1 billion. The results will be closely watched for updates to the company’s fiscal 2026 guidance, particularly around client fund interest yields and new business bookings, both of which have maintained momentum despite a softer hiring environment. For FY26, ADP anticipates revenue growth of 5% to 6% year-over-year, supported by stable employment trends and pricing discipline, while adjusted diluted EPS is expected to increase by 8% to 10%, reflecting strong cost control and ongoing margin expansion.
▣ BlackRock (BLK) launched its iShares Bitcoin ETP on the London Stock Exchange, aimed at UK retail investors, following the Financial Conduct Authority’s lifting of its ban on retail crypto-product access.
The physically-backed product allows exposure to bitcoin without direct holding, broadening BlackRock’s reach into the UK digital assets market. For investors in BlackRock, this move signals a meaningful expansion of its digital assets offering – potentially boosting fee income and widening its client base in a growing segment.
▣ Bank of Nova Scotia (BNS) announced a sweeping cost-cutting initiative in its Canadian banking division, with internal memos showing the elimination of up to 2,500 jobs as part of a broader push to enhance efficiency and focus on higher-return activities. Management stated that the move is meant to streamline operations by concentrating on key growth areas and cutting back on activities that don’t directly benefit customers or the bank’s performance.
▣ ExxonMobil (XOM) is set to release its Q3 2025 earnings on October 31, and investors will be watching closely for clues on how the oil major navigates volatile commodity markets. Analysts expect adjusted earnings of around $1.82 per share and revenue of around $87 billion, implying a modest year-over-year decline.
In a recent regulatory filing, Exxon flagged that crude oil price changes could swing upstream earnings by up to +$300 million, while falling natural-gas prices could trim earnings by as much as $200–$300 million. Refining margins offer a potential lift – with the company anticipating a $300–$700 million boost in that segment versus Q2. Amid these mixed headwinds and tailwinds, investors will focus on commentary about production growth, capital spending, and free cash-flow outlook – especially given Exxon’s capital-intensive upstream and downstream operations.
▣ IBM (IBM) delivered a strong Q3 2025 performance, posting revenue of $16.3 billion, a 9.1% year-over-year increase that beat analyst expectations. Adjusted earnings per share came in at $2.65, topping the $2.45 forecast and reflecting a 15% increase from the prior year. The company’s software segment grew 10% to $7.2 billion, while infrastructure revenue surged 17% to $3.6 billion, driven in part by strong demand for its AI-enabled mainframe systems. IBM revealed that its “AI-book-of-business” now tops $9.5 billion, underlining its focus on high-value enterprise AI and cloud offerings. Accordingly, the company raised its full-year guidance, now expecting more than 5% revenue growth at constant currency and free cash flow of about $14 billion.
▣ According to a Bloomberg report, JPMorgan Chase (JPM) plans to let institutional clients use Bitcoin and Ether holdings as collateral for loans by the end of 2025, marking a significant expansion of its crypto-collateral program. The initiative, offered globally, will use a third-party custodian to safeguard pledged tokens and builds on the bank’s earlier move to accept crypto-linked ETFs as collateral.
▣ Lockheed Martin (LMT) delivered a strong third quarter in 2025, posting $18.6 billion in sales – a roughly 9% year-over-year increase. Net earnings landed at $1.6 billion, or $6.95 per share, up from $6.80 a year earlier and beating analyst expectations. Cash from operations rose to $3.7 billion while free cash flow reached $3.3 billion. A record backlog of $179 billion underscores strong demand across the defense portfolio, particularly in aeronautics and missile systems. The company returned $1.8 billion to shareholders and increased its share repurchase authorization to $9 billion. The company raised its forecast for FY25, and management now expects revenue of $74.5 billion and EPS of around $22.25, both at the midpoint.
▣ PhilipMorris (PM) delivered a strong third-quarter performance, reporting revenue of $10.8 billion, up about 9.4% year-over-year, and adjusted EPS of $2.24, a 17.3% increase from the prior year and ahead of expectations. Much of the growth was driven by its expanding smoke-free product portfolio – heat-not-burn systems and nicotine pouches – which outpaced the growth of traditional combustible products. Management raised its FY25 adjusted EPS guidance to $7.51 at the midpoint, citing both margin improvement and accelerating traction of next-generation products rather than cigarettes alone. While cigarette volumes remain under pressure globally, the shift toward higher-margin smoke-free items and cost discipline position the company firmly on its transformation path.
▣ VICI Properties (VICI) is set to announce its Q3 2025 earnings on October 30, and analysts currently expect earnings of around $0.69 per share and revenue of nearly $1 billion. The firm’s portfolio includes iconic venues such as Caesars Palace and MGM Grand, under long-term triple-net leases, which offer a degree of stability amid broader macro uncertainty. In FY25, the company has projected Adjusted Funds From Operations (AFFO) per diluted share of $2.36 at the midpoint.
▣ VZ (VZ) is set to report its third-quarter results on October 29, with bullish investors hoping for signs of continued stability in its wireless business and progress in subscriber retention. Wall Street expects the telecom giant to post earnings of $1.19 per share on revenue of $34.3 billion, reflecting modest year-over-year growth. The company’s performance will likely hinge on trends in postpaid phone additions, broadband subscriber gains, and pricing initiatives across its 5G network plans.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.94% | +5.90% | $5,889.50 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Dec 11, 2025 | Jan 01, 2026 | 2.46% | $6.16 |
| Amgen (AMGN) | Nov 18, 2025 | Dec 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Dec 04, 2025 | Dec 23, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jan 07, 2026 | Jan 29, 2026 | 5.98% | $3.21 |
| EOG Resources (EOG) | Jan 15, 2026 | Jan 29, 2026 | 3.06% | $4.08 |
| ExxonMobil (XOM) | Nov 17, 2025 | Dec 10, 2025 | 3.64% | $3.96 |
| IBM (IBM) | Nov 12, 2025 | Dec 10, 2025 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jan 06, 2026 | Jan 29, 2026 | 3.43% | $6.00 |
| Kroger (KR) | Nov 17, 2025 | Dec 01, 2025 | 3.08% | $1.40 |
| Lockheed Martin (LMT) | Dec 02, 2025 | Dec 29, 2025 | 2.85% | $13.80 |
| PepsiCo (PEP) | Dec 09, 2025 | Jan 06, 2026 | 3.8% | $5.69 |
| Philip Morris (PM) | Dec 26, 2025 | Jan 13, 2026 | 6.06% | $5.88 |
| Qualcomm (QCOM) | Dec 08, 2025 | Dec 22, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Dec 17, 2025 | Jan 09, 2026 | 5.22% | $1.8 |
| Verizon (VZ) | Jan 12, 2026 | Feb 03, 2026 | 6.09% | $2.76 |
NameEX-Dividend DatePayment DateYield on Cost Annual DPS
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
