Understanding PPG's Dividend Strategy and Growth Prospects
PPG Industries Inc (PPG, Financial) recently announced a dividend of $0.65 per share, payable on 2024-03-12, with the ex-dividend date set for 2024-02-15. 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?
PPG Industries Inc is a global producer of coatings and the world's largest producer of coatings following the acquisition of selected Akzo Nobel assets. PPG's products are sold to a diverse array of end users, including those in automotive, aerospace, construction, and industrial markets. With a significant presence in multiple regions around the world, PPG Industries Inc has strategically focused on its coatings and specialty products while expanding into emerging regions, as highlighted by the Comex acquisition.
A Glimpse at PPG Industries Inc's Dividend History
PPG Industries Inc has upheld a steadfast dividend payment track record since 1972, distributing dividends quarterly. The company has not only maintained but also increased its dividend each year since 1972, earning it the prestigious title of a dividend king—a testament to its commitment to providing consistent shareholder value. Below is a chart showing the annual Dividends Per Share to track historical trends.
Breaking Down PPG Industries Inc's Dividend Yield and Growth
As of today, PPG Industries Inc boasts a 12-month trailing dividend yield of 1.81% and a forward dividend yield of 1.83%, indicating an anticipated increase in dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 6.90%, which extended to a five-year horizon increases to 7.10% per year. Over the past decade, PPG Industries Inc's annual dividends per share growth rate stands at 7.90%. Reflecting on these figures, the 5-year yield on cost for PPG Industries Inc stock is approximately 2.55%.
The Sustainability Question: Payout Ratio and Profitability
To gauge the sustainability of PPG Industries Inc's dividends, one must consider the company's payout ratio. With a dividend payout ratio of 0.33 as of 2023-12-31, PPG Industries Inc retains a substantial portion of its earnings, ensuring funds are available for future growth and unforeseen challenges. The company's profitability rank of 8 out of 10 as of 2023-12-31 suggests strong profitability prospects, bolstered by a decade-long track record of positive net income.
Growth Metrics: The Future Outlook
For dividend sustainability, robust growth metrics are essential. PPG Industries Inc's growth rank of 8 out of 10 indicates a favorable growth trajectory compared to its competitors. While the company's revenue per share and 3-year revenue growth rate demonstrate a strong revenue model, its performance is modest compared to global competitors, with an average annual increase of 5.40%. The 3-year EPS growth rate and 5-year EBITDA growth rate, which underperform compared to many global competitors, highlight areas where PPG Industries Inc may need to focus to bolster its long-term dividend prospects.
Investor Takeaways
PPG Industries Inc's long-standing history of dividend payments and growth, coupled with a reasonable payout ratio and high profitability rank, paints a picture of a reliable dividend-paying company. However, investors should also weigh the company's moderate revenue and earnings growth rates when considering the future sustainability of dividend payments. With these factors in mind, value investors can use GuruFocus resources such as the High Dividend Yield Screener to identify similar investment opportunities.
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.
