RPM International (RPM) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
RPM International in Focus
Headquartered in Medina, RPM International (RPM) is a Construction stock that has seen a price change of -6.01% so far this year. The specialty chemicals company is currently shelling out a dividend of $0.46 per share, with a dividend yield of 2.01%. This compares to the Paints and Related Products industry's yield of 0.79% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.84 is up 10.8% from last year. Over the last 5 years, RPM International has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.03%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. RPM International's current payout ratio is 38%, meaning it paid out 38% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, RPM expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5 per share, which represents a year-over-year growth rate of 16.28%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, RPM is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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RPM International Inc. (RPM) : Free Stock Analysis Report
