PPG Industries Inc's Dividend Analysis
A Comprehensive Look at PPG Industries Inc's Dividend Performance and Sustainability
PPG Industries Inc (NYSE:PPG) recently announced a dividend of $0.65 per share, payable on 2023-12-12, with the ex-dividend date set for 2023-11-08. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into PPG Industries Inc's dividend performance and assess its sustainability.
What Does PPG Industries Inc Do?
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PPG Industries Inc is a global producer of coatings. The company is the world's largest producer of coatings after the purchase of selected Akzo Nobel assets. PPG's products are sold to a wide variety of end users, including the automotive, aerospace, construction, and industrial markets. The company has a footprint in many regions around the globe, with less than half of sales coming from North America in recent years. PPG is focused on its coatings and specialty products and expansion into emerging regions, as exemplified by the Comex acquisition.
A Glimpse at PPG Industries Inc's Dividend History
PPG Industries Inc has maintained a consistent dividend payment record since 1972. Dividends are currently distributed on a quarterly basis. PPG Industries Inc has increased its dividend each year since 1972. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 51 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PPG Industries Inc's Dividend Yield and Growth
As of today, PPG Industries Inc currently has a 12-month trailing dividend yield of 1.95% and a 12-month forward dividend yield of 2.02%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, PPG Industries Inc's annual dividend growth rate was 6.90%. Extended to a five-year horizon, this rate increased to 7.10% per year. And over the past decade, PPG Industries Inc's annual dividends per share growth rate stands at 7.90%.
Based on PPG Industries Inc's dividend yield and five-year growth rate, the 5-year yield on cost of PPG Industries Inc stock as of today is approximately 2.75%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, PPG Industries Inc's dividend payout ratio is 0.42.
PPG Industries Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PPG Industries Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. PPG Industries Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and PPG Industries Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. PPG Industries Inc's revenue has increased by approximately 5.40% per year on average, a rate that underperforms than approximately 64.75% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, PPG Industries Inc's earnings increased by approximately -0.90% per year on average, a rate that underperforms than approximately 67.62% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.60%, which underperforms than approximately 69.74% of global competitors.
Next Steps
In conclusion, PPG Industries Inc's consistent dividend payments, attractive growth rate, reasonable payout ratio, and solid profitability suggest that its dividends are sustainable over the long term. However, investors should keep an eye on the company's growth metrics, as they can impact future dividends. While PPG Industries Inc's revenue per share and 3-year EPS growth rate are commendable, it's worth noting that they underperform compared to global competitors. Therefore, investors should consider these factors when making investment decisions.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
