NYSE:SHW) stock is about to trade ex-dividend in two days. This means that investors who purchase shares on or after the 20th of August will not receive the dividend, which will be paid on the 11th of September.” data-reactid=”28″>The Sherwin-Williams Company (NYSE:SHW) stock is about to trade ex-dividend in two days. This means that investors who purchase shares on or after the 20th of August will not receive the dividend, which will be paid on the 11th of September.
Sherwin-Williams’s next dividend payment will be US$1.34 per share. Last year, in total, the company distributed US$5.36 to shareholders. Based on the last year’s worth of payments, Sherwin-Williams stock has a trailing yield of around 0.8% on the current share price of $666.56. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! As a result, readers should always check whether Sherwin-Williams has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Sherwin-Williams ” data-reactid=”30″>Check out our latest analysis for Sherwin-Williams
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Sherwin-Williams paid out a comfortable 26% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 20% of its free cash flow last year.
It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”37″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, Sherwin-Williams’s earnings per share have been growing at 16% a year for the past five years. Earnings per share have been growing rapidly and the company is retaining a majority of its earnings within the business. This will make it easier to fund future growth efforts and we think this is an attractive combination – plus the dividend can always be increased later.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Sherwin-Williams has lifted its dividend by approximately 14% a year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Has Sherwin-Williams got what it takes to maintain its dividend payments? We love that Sherwin-Williams is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. These characteristics suggest the company is reinvesting in growing its business, while the conservative payout ratio also implies a reduced risk of the dividend being cut in the future. It’s a promising combination that should mark this company worthy of closer attention.
we’ve identified 2 warning signs with Sherwin-Williams and understanding them should be part of your investment process.” data-reactid=”55″>In light of that, while Sherwin-Williams has an appealing dividend, it’s worth knowing the risks involved with this stock. In terms of investment risks, we’ve identified 2 warning signs with Sherwin-Williams and understanding them should be part of your investment process.
checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.” data-reactid=”60″>If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.