Google the words "Dividend Aristocrat" and a variety of stock lists pop up. Some include the company named RPM International (RPM) … many do not.
Consider this from the company website, "RPM's track record of 38 consecutive annual cash dividend increases places it in an elite category of less than three-tenths of one percent of all publicly-traded U.S. companies. Only 46 of the 19,000 U.S. public companies have consecutively paid an increasing annual dividend for this period of time or longer, according to the 2012 edition of the Mergent Handbook of Dividend Achievers."
Dividends have been paid since 1969 with increasing dividends paid for 38 consecutive years. This is a company that gets my attention!
RPM International is a world leader in manufacturing and distribution of specialty coatings, sealants, and specialty chemicals used primarily for maintenance, repair and improvement applications. Industrial products accounted for 67 percent of total sales with consumer products generating a third of revenue.
Take a walk through a big box home improvement retailer or neighborhood hardware store and an investor will recognize these brand names that are targeted at consumer solutions: Rust-Oleum rust preventative paints and garage floor coatings, DAP caulks and sealants, WATCO Teak Oil, Varathane Polyurethane to name a few.
The financial crisis and slow recovery adversely impacted RPM's net sales and earnings and yet 2012 results (fiscal year ended May 31) illustrate the company may be on the right track.
Net Sales (billions)
Net Income (millions)
Dividend / share
We may or may not see growth in the industrial segment brought about by an improving world-wide economy and a return to normal building and maintenance expenditures. The company grew industrial segment sales by more than 12 percent in fiscal 2012 without significant economic expansion. Should we experience gradual economic improvement, RPM is well positioned to benefit.
Results in the consumer segment are improving (plus 10.7 percent in fiscal 2012) as homeowners invest in maintenance and improvements in their homes. This trend is also seen in the results of home improvement retailers. Through gains in market share and product line extensions like those experienced in 2012, RPM should continue the organic growth experienced as indicated by the growth of net sales in the chart above.
Growth by acquisition is in the DNA of this company. From the highly successful purchase and integration of Rust-Oleum in June, 1994 to the announcement on September 24, 2012, about the purchase of Synta, Inc., which is a producer of innovative exterior wood deck and concrete restoration systems, RPM has a successful track record of growth through acquisitions. In fiscal 2012 the company acquired six businesses with annual sales of more than $180 million.
During fiscal 2012, 59% of RPM sales came from the United States with the remaining 41% generated internationally.
Stock Details and competitors:
RPM, Inc. has a market cap of $3.8 billion and is selling at $28.84 with a 52 week range of $17.67-29.47. The company has a trailing P/E of 17.5. RPM pays an annual dividend of .86 for a yield of 2.90. 1.66% of the company is owned by insiders and 31 percent of total shares are owned by individual Stockholders with institutions owning 68 percent. RPM has paid dividends since 1969 with 38 years of consecutive dividend increases.
- PPG Industries (PPG) has a market cap of $17.5 billion and is selling at $115.03 with a 52 week range of $66.43--$119.86. The company has a trailing P/E of 19.9. PPG pays an annual dividend of $2.36 for a yield of 2%. Less than one third of one percent of the company is owned by insiders with 72% held by institutions. PPG has paid dividends since 1899 and has experienced 40 years of consistent increasing dividends.
- Sherwin-Williams (SHW) has a market cap of $15 billion and is selling at $147.83 with a 52 week range of $73.06--$150.80. The company has a trailing P/E of 29.74. Sherwin-Williams pays an annual dividend of $1.56 for a yield of 1.05%. 17% of the company is owned by insiders with 69% held by institutions. SHW has paid dividends since 1979 with 32 consecutive years of dividend increases.
RPM is the exciting, growing mid-cap company against much bigger large-cap competitors. RPM boasts the lowest P/E ratio and throws off the greatest yield in terms of annual dividend payments. All three of these materials/specialty chemical stocks have excellent records of dividend payment increases. RPM should be considered for any long dividend-oriented portfolio.
Disclosure: I am long RPM.