PPG Industries is a dividend aristocrat as well as a component of the S&P 500 index. It has been increasing its dividends for the past 36 consecutive years. From the end of 1997 up until August 2008 this dividend growth stock has delivered an annual average total return of 4.40 % to its shareholders.
At the same time company has managed to deliver an 1.20% average annual increase in its EPS since 1998.
The ROE has ranged between 16% and 27% with the exception of a brief spike down in 2001 and 2002.
Annual dividend payments have increased over the past 10 years by an average of 4.00% annually, which is much higher than the growth in EPS. A 4% growth in dividends translates into the dividend payment doubling almost every 18 years. If we look at historical data, going as far back as 1987, PPG has actually managed to double its dividend payment every ten years on average.
If we invested $100,000 in PPG on December 31, 1997 we would have bought 1850 shares. In February 1998 your quarterly dividend income would have been $629. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $1318.20 by August 2008. For a period of 10 years, your quarterly dividend income would have increased by 53%. If you reinvested it though, your quarterly dividend income would have increased by 110%.
The dividend payout has largely remained under 60% over our study period, with the exception of the brief spike to 70% in 2001. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
I think that PPG is attractively valued with its low price/earnings multiple of 16 and low DPR as well as an attractive yield.
Disclosure: I do not own shares of PPG