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Why PPG Industries’ Dividend Yield Is in a Downward Trend

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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 May 11, 2017, PPG Industries (PPG) stock closed at $107.46. With the assumption that PPG’s annual dividend for 2017 will remain constant at the present rate, PPG’s current dividend yield is 1.5%.

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PPG Industries peers Sherwin-Williams (SHW), RPM International (RPM), and Valspar (VAL) have dividend yields of 1.0%, 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. However, PPG’s dividend yield is on a downward trend. PPG’s dividend yield has fallen from 1.9% in 1Q15 to its current dividend yield of 1.5%, primarily due to the increase in stock price.

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 from 28.6% in 1Q15 to 31% in 1Q17. However, if the upward payout trend continues, PPG will end up with less to reinvest for future growth unless its EPS growth outpaces its dividend growth.

You can indirectly hold PPG Industries by investing in the iShares U.S. Basic Materials ETF (IYM). As of May 10, 2017, IYM has invested 4.7% of its holdings in PPG.

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

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