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Sherwin-Williams Hikes Dividend

Zacks Equity Research

The Sherwin-Williams Company (SHW) has announced a 28% hike in its quarterly dividend to 50 cents per share from 39 cents per share. The dividend is payable on Mar 8, 2013, to shareholders of record as of Feb 25, 2013.

The revision represents Sherwin-Williams’ 34th consecutive year of dividend increase. Prior to this, the company increased its dividend in Feb 2012 by 7% to 39 cents per share from 36.5 cents per share.

Sherwin-Williams, which is among the major paint companies along with Akzo Nobel NV (AKZOY), The Valspar Corporation (VAL) and PPG Industries Inc. (PPG), released its fourth-quarter 2012 results last month. The company’s fourth quarter adjusted earnings of $1.17 per share surpassed the Zacks Consensus Estimate of $1.15.

The adjusted earnings exclude asset impairment charges of 2 cents a share and a negative acquisitions and currency translation impact of 3 cents a share. Including that impact, earnings stood at $1.12 per share in the reported quarter compared with 14 cents in the year-ago quarter.

Net sales for the quarter increased 7.3% year over year to $2.22 billion and exceeded the Zacks Consensus Estimate of $2.20 billion. The growth was driven by an increase in paint sales volume and selling price, partly offset by the negative impacts of currency translation.

Sherwin-Williams’ philosophy is to diversify its customer base and expand its operations into various geographies. It follows a strategy of growth through acquisitions and internal initiatives such as efficient working capital management and innovation. The company continues to invest in its Paint Stores Group segment to boost market share.
However, Sherwin-Williams continues to contend with raw material costs inflation. Higher raw material costs impacted every reporting segment in the fourth quarter. The company also remains exposed to currency headwinds.

Sherwin-Williams currently retains a Zacks Rank#3 (Hold).

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