Is PPG Industries’ Dividend Yield Better Than Its Peers?



PPG Industries’ dividend yield

A dividend yield is a measure of a company’s annual dividend per share as it relates to its price per share. It indicates how much cash an investor is getting for every dollar invested in a company’s equity. A high dividend yield is a good sign, as it provides investors with a stable income.

On March 1, 2017, PPG Industries (PPG) stock closed at $103.29. With PPG declaring a 1Q17 quarterly dividend of $0.40 per share, its current dividend yield is ~1.6%.

PPG’s peers Sherwin-Williams (SHW), RPM International (RPM), and Valspar (VAL) have dividend yields of 1.1%, 2.3%, and 1.3%, respectively. As you can see, PPG has a better current dividend yield than its peers, with the exception of RPM.

Since 2011, PPG Industries’ dividend yield has fallen drastically, primarily due to the rise in PPG stock, which has outpaced its dividend growth. However, PPG’s current dividend yield is still better than the yield on one-year Treasury bills and still qualifies as a dividend stock.

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Dividend payout

Dividend payout can be calculated by dividing annual dividend per share by annual EPS (earnings per share), expressed as a percentage. It tells what percentage of earnings a company is paying out as a dividend.

PPG’s dividend payout has been on the rise since 2011, from 32.9% to 47.6% in 2016. That’s not an ideal situation for PPG since the company will end up with less to reinvest for future growth. PPG’s peer Sherwin-Williams had a payout ratio of 30.1% in 2016.

You can indirectly hold PPG Industries by investing in the Guggenheim S&P 500 Equal Weight Materials ETF (RTM). As of March 1, 2017, RTM has invested 4.0% of its holding in PPG.

In the next part, we’ll look at the latest analyst ratings for PPG Industries.


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