The most recent dividend increase was in October 2011, when the Board of Directors approved a 2.40% increase in the quarterly dividend to 21.50 cents/share. RPM International ’s largest competitors include Valspar (VAL), PPG Industries (PPG) and Sherwin-Williams (SHW).
Over the past decade this dividend growth stock has delivered an annualized total return of 11.60% to its shareholders.
The company has managed to deliver a 4.60% annual increase in EPS since 2001. Analysts expect RPM International to earn $1.60 per share in 2012 and $1.77 per share in 2013. In comparison RPM International earned $1.46 /share in 2011.
The company’s Returns on Equty has been quite volatile, and closely followed the volatility in EPS. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 6% per year over the past decade, which is higher than the growth in EPS. Dividend increases have been largely symbolic over the past three years however.
A 6% growth in distributions translates into the dividend payment doubling every twelve years. If we look at historical data, going as far back as 1996, we see that RPM International has actually managed to double its dividend every 15 years on average.
The dividend payout ratio has remained below 50% in only 3 of the past ten years, and has closely tracked the volatility in earnings. Based on forward earnings for 2011 however, the payout ratio is close to 50%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently RPM International is trading at 13.40 times earnings, yields 4.10% and has a sustainable forward dividend payout. The erratic earnings picture over the past decade however makes this stock a hold.
Full Disclosure: Long RPM