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Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn't sustainable. In others, the dividend is so low, it's not even worth the paper your dividend check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, and one day each week for the rest of the year, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say that these stocks don't share the same macro risks that other companies have, but they are a step above your common grade of dividend stock. Check out last week's selection.

This week, I want to focus on a brand name bound to find its way under many Christmas trees and into many garages this holiday season: Stanley Black & Decker (NYSE: SWK  ) .

Batteries not included
Stanley Black & Decker, a manufacturer of handheld and power tools as well as security systems, has struggled to grow sales for years as investors have remained preoccupied with growth concerns in the housing sector. The company's reliance on Europe and the United States, which account for 24% and 53% of sales, respectively, and are both desperately trying to find ways to reduce spending to bring deficits under control, have hampered results. In fact, Stanley's fourth-quarter forecast, released in October, actually fell $0.05 shy of Wall Street estimates.

The picture I've painted here may not seem all too rosy, but I can assure you that Stanley Black & Decker stands ready to nail down its results in the future.

Measure twice, cut once
To begin with, I'd take my cues from macroeconomic data and the companies in a similar sector to Stanley Black & Decker. All macro data recently has suggested that housing prices have bottomed, that permits to build are rising, and that people are spending more freely on homes thanks to low lending rates. This is all conducive to a surge in new homes sales as well as in home equity loans to improve or renovate a home.

The evidence of this surge is all around us, with do-it-yourself retailers The Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) reporting a 4.2% and 1.8% improvement, respectively, in global same-store sales in their most recent quarterly reports. From homebuilders like Lennar (NYSE: LEN  )  which has expanded its sector-leading homebuilding margin to 22.3%, to wholesale roofing company Beacon Roofing Supply (NASDAQ: BECN  ) which just capped a record fourth-quarter for sales, the signs of an improving landscape for machined tools is everywhere.

Second, I wouldn't discount Stanley's plans to focus on emerging markets like Asia and Latin America for the remainder of this decade. According to Reuters, emerging markets accounted for just 14% of total revenue in the fourth quarter, and the company is planning to utilize $20 million beginning this quarter to promote its brands internationally. In total, Stanley Black & Decker plans to spend $100 million through 2015 in order to boost total sales received from emerging markets to 20% by 2015 and potentially 30% by 2020. This may seem like a lofty goal, but considering that many of these markets are immune to the global malaise currently afflicting Europe and the U.S., it could go a long way to shielding Stanley from economic cyclicality.

Another important factor that may seem like a negative on the surface but that I construe as a positive is the company's aggressive action to cut costs. Twice in 2012, Stanley Black & Decker has reduced headcount in order to cut expenses and, according to The Wall Street Journal, noted in July that it'd be curtailing additional acquisitions over a 12-to-18-month period in order to focus on cost synergies from previous deals and recharge its organic growth. While "layoffs" might be a word that makes you want to run away, the key phrase there is "focus on cost synergies and recharge organic growth." I love acquisitions, but I prefer organic growth a lot more!

Hit the nail on the head
One area in which Stanley Black & Decker has undoubtedly hit the nail on the head is its very generous quarterly dividend. According to, Stanley Black & Decker has been paying shareholders a dividend since 1877! That's right, 136 consecutive years of sharing with its investors; that isn't a typo. Furthermore, with a 20% boost in its quarterly stipend announced in July, it marked its 45th consecutive year of annual dividend increases. Have a look for yourself:

Source: Stanley Black & Decker investor relations.

Having grown at a compounded rate of 8% annually over that 45-year period, Stanley's current yield of 2.6% may not seem like much, but it's as rock-solid as they come. The company's current payout ratio of 52% signals that a good chunk of profits is shared with investors, but it also leaves plenty of room for the company to promote its brands overseas and to boost its payout in the future.

Foolish roundup
I've said it before and I'll say it again: Sometimes the best dividend plays are the names right under our noses. Stanley Black & Decker isn't going to surprise Wall Street with double-digit growth, but it gives investors access to a powerful global brand name that understands where its future growth will come from. At just 12 times forward earnings and 1.7 times book value, Stanley is also valued at the low end of its decade-long valuation range. On top of this, Stanley's dividend and its growth are matched by very, very, few companies. If you're having trouble sleeping at night and have a case of fiscal cliff-itis, then Stanley Black & Decker is the perfect prescription for you!

More expert advice from The Motley Fool
If you're interested in dividends on your quest for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dependable dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here to discover the winners we've picked.

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SWK $119.71 Down +0.00 +0.00%
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