Stanley Black & Decker (SWK) - Get Report is an American toolmaker with more than 150 years of history, but it is embracing change.

Although the company has increased earnings by less than 6% annually over the past five years, Stanley Black & Decker is well-known for paying nearly five decades worth of annual rising dividends.

No one would have expected this company to get aggressive, but it is probably time to change that notion.

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Two fairly large acquisitions prove that Stanley Black & Decker is in the midst of a transformation. These big changes have occurred under the leadership of new Chief Executive James Loree, who on Aug. 1 succeeded John Lundgren.

Loree is a busy deal maker. Within months of his appointment, Stanley Black & Decker bought Newell Brands' tool business in a $1.95 billion deal, the company's first since 2013.

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Next, Stanley Black & Decker said that it will sell off a major portion of its own mechanical security business to Switzerland's Dormakaba for $725 million in cash.

The motive is clear: Raise cash for potential upcoming transactions. And a likely target is Sears Holdings' Craftsman business.

The beleaguered department store chain has been looking for a buyer of its popular tool line as it divests its assets. Bidders could include Stanley Black & Decker and Hong Kong-based Techtronic Industries.

Stanley Black & Decker has room to increase its $4 billion debt level only if it manages to grow faster. 

Analysts project the company will deliver earnings growth of less than 10% on average annually for the next five years. This isn't bad, given that, during the same time frame, rival Danaher's projected growth is just 6.5%, while Timken's earnings are seen growing by just 2.5%.

Dividend investors must keep in mind two factors.

First, Stanley Black & Decker's nearly 2% yield is considered good, and the low payout ratio of 35.7% shows that there is room to increase dividends. Regardless of the growth moves by the company, dividend appreciation will probably not hit a ceiling.

Second, if the growth moves start paying off, it could set off a cycle of more free cash flow and consequently more dividends.

There are, however, certain risks for shareholders. Stanley Black & Decker may be exposed to near-term challenges such as increasing competition, leverage and rising expenses.

In addition, the adverse impact of the foreign-exchange market and the usual dangers of global expansion may affect the company.

However, Stanley Black & Decker isn't the only company to face these issues. Provided that industrial activities and the U.S housing market hold up, there are unlikely to be any nasty surprises.

The company's new growth focus and intent to generate higher revenue are commendable. Stanley Black & Decker's willingness to change and grow should be viewed positively, and long-term investors hunting for a play on the U.S. economic recovery should buy the stock on the dips.

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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.