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RPM International: Cost Cutting Leading To Wonderful Cash Flow Growth

Apr. 04, 2021 10:44 AM ETRPM International Inc. (RPM)11 Comments
Passive Income Pursuit profile picture
Passive Income Pursuit


  • RPM International is a Dividend Champion with 47 consecutive years of dividend growth. Shares currently yield 1.64%.
  • RPM International is a leader in the specialty chemicals market with a diverse customer base from construction, manufacturing, industrial and consumer segments.
  • RPM International has been active in bolt-on acquisitions of other niche products.
  • The MAP to Growth Initiative to reduce costs and redundancies has led to explosive growth in cash flows that can be funneled back to shareholders or used for further acquisitions.

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RPM International (NYSE:RPM) is a leader in the specialty chemicals market with a diverse customer base from construction, manufacturing, industrial and consumer segments. RPM fared well during the turmoil of 2020, thanks in large part to its

This article was written by

Passive Income Pursuit profile picture
I started a dividend growth investment strategy a few years ago and am aggressively growing my portfolio to churn out enough dividends to reach financial independence.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in RPM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

Dr. Tan profile picture
Great true quality company.
i wish berkshire would get going and buy this and split company in 1/2. and get rid of low profit companies. fits into ben moore as rpm has very little retail other than rustoleum and dap
RickRaff69 profile picture
I buy RPM monthly & use DRIP for the past 10 years. I am happy with my investment. Their dividend is weak even though they increase yearly. This company changed when Elliott Management got involved. Their "Map to Growth" is an EM idea which is paying off nicely. RPM is much more efficient and aggressive under EM. Frank was wise to "bring them in" and good things have happened in the past few years under their guidance. This company has a 30% ROE and one of the most stable companies in regards to earnings. This is a slow ad steady grower which pays you a little along the way...
@RickRaff69 Mostly I agree. But you buy RPM monthly!? How does that work? Do you just plug in a set amount of money on a particular date and accept the results whatever they may be, or is there some more complicated formula at work? Have you ever considered put options to increase your holdings?
RickRaff69 profile picture
@2Reb It is an automatic deposit. RPM just switched companies. Their transfer agent is now AST. No options...
A solid hold, and possibly a buy for a younger investor with time on his/her side. As a retired investor, the sub-2% dividend doesn't get past my screener.
Harry Livermore profile picture
I built up my position slowly using the DRIP during the 90s and early 2000s. RPM has been a steady performer and I am thrilled to have held it. Long RPM.
Thank you for the article, author.
I bought equal lots back in 07 and 14, and am currently looking at a 250% gain not including dividends. Not an exciting company, but I bought because I liked their product lines and don't mind buying a premium product at a higher price. A graph of their stock price makes it easy to sleep at night, and the dividend is just icing on the cake. This stock will continue to be part of my retirement income stream, which is now 2X what my salary was when I retired. No FANGS or Tesla in my portfolio because they don't meet my investment thesis for this time in my life.
I have owned RPM for about four and a half years. It is now my second largest position, using my cost basis divided by my total capital invested as the measure of that. So far, my returns have not been commensurate with the size of my bet. I have only a 22% unrealized gain, and the dividend has repaid barely 3% of my cost basis so far. I fear I have jumped the gun.

The ten-year Treasury market is telling me that I need a return of at least 1.72% a year to get my purchasing power back after a decade, and the thirty-year bond is telling me I need at least 2.4% a year. I don't see that happening with the RPM's current yield.

Basic Materials is the hottest segment of the market at the moment, which makes it easier for me to overlook the fact that I paid too much.
JOHNDAN09 profile picture
Thank you for the article. I've owned $RPM since 2018. This is one of those companies out of a handful that I own, not for parabolic price movements, but for slow steady increases over the long haul. Plus a fair dividend. I add when I deem prudent. A quick look at their website shows familiar product names one can see all around the home warehouse and hardware stores, along with not-so-familiar names. These types of stocks help nicely in rounding out a diverse portfolio.
Thanks for this post on RPM.
First owned RPM, RPOW back then, in the late 1970s ; should have
loaded up on it and held it.
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