Sherwin-Williams’s 2019 second-quarter dividend
In a press release on April 17, Sherwin-Williams’s (SHW) board announced a regular cash dividend for the second quarter of 2019. To be eligible for this dividend, investors should hold SHW stock as of the close of May 17. The dividend will be paid on the number of outstanding shares as of that date.
For the second quarter, SHW declared a dividend of $1.13 per share, a ~31.4% increase year-over-year. However, there hasn’t been a change in the dividend rate over the previous quarter. SHW peers PPG Industries (PPG) and RPM International have paid second-quarter dividends of $0.48 and $0.35 per share, respectively, while Axalta (AXTA) hasn’t announced a dividend.
At the end of Q1 2019, SHW had outstanding shares of 91.95 million. Assuming there are no buybacks prior to record date, then SHW would spend ~$103.90 million to pay dividends.
Operating cash flow
Dividends are generally paid out of free cash flow. SHW defines free cash flow after deducting capital expenditures and cash dividends from net operating cash. Thus, SHW pays dividends from its net operating cash. Since 2012, SHW’s dividend has grown at a compound annual growth rate of 16.4%. In the past six years, SHW’s dividend payments have been in the range of 17%–23% of its net operating cash, and the company has still been able to generate positive free cash flow.
Investors seeking indirect exposure to Sherwin-Williams could consider the Materials Select Sector SPDR ETF (XLB), which had 4.6% exposure to Sherwin-Williams as of May 15.