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RPM

3 Attractive Income Stocks Whose Dividends Could Double

"What keeps RPM from dramatically boosting its dividend payout?" you might be wondering? Keep in mind that RPM is a cyclical company that can find itself dependent on global growth and the pricing of certain commodities. As such, it needs to maintain a dividend that's sustainable during the inevitable economic downturns.

Image source: RPM International.

RPM International's latest quarterly report was far from its best, but that was primarily because adverse weather conditions and foreign currency exchange hurt its results. Once the unseasonably wet weather passes in the domestic markets, I would expect we'll see mid-single-digit organic growth in RPM's consumer segment. The U.S. jobs market is healthy and home prices are rising, which should give homeowners plenty of impetus to take on projects.

Global growth prospects also look modestly strong once currency fluctuations are removed from the equation. In constant dollars, sales in Brazil jumped 16% during the quarter, and the assumption would be that in the coming years as commodities begin to form a base we'll see a rebound in RPM's global construction business as well.

In the meantime, RPM International is projected to grow its full-year EPS to $2.81 by 2017 from a reported $2.38 in 2015. I suspect there's enough cushion in these growth estimates to support mid-to-upper single-digit percentage dividend growth in the coming years.

Whirlpool

Last, but not least, I'd suggest turning your attention to appliance juggernaut Whirlpool if you'd like a mix of income and growth.

Image source: Whirlpool.

Like most in-home appliance companies, Whirlpool struggled with the global meltdown between 2007 and 2009. However, the company emerged from the recession stronger than ever. Whirlpool has been working tirelessly to cut its costs, improve its margins, bring new and innovative products to market that'll entice consumers to step up to higher margin appliances, and focus its efforts on faster growing emerging markets. All of these initiatives, along with some key acquisitions, appear to be paying off in a big way.

In the third quarter, Whirlpool announced that, sans currency effects, its revenue soared 25%, and its ongoing business operating profit hit a record $418 million, or 7.9% of sales. We can really see its scorching growth when we look overseas. Excluding currency impacts, Whirlpool Asia sales rose 127%, although this was aided partially by acquisitions. Whirlpool Europe, Middle East, and Africa also saw currency-excluded sales growth rise by 127% to $1.5 billion. Diversifying its business globally should help Whirlpool avoid the struggles it experienced during the Great Recession.

Buying Whirlpool also allows you to play the numbers game, much like what was described above with Chemed. A growing global population and rapid growth in emerging markets means the need for more housing. More housing, in turn, means the need for appliances. Despite holding in the neighborhood of 30% market share in the U.S., it's Asia and the Middle East that could be Whirlpool's greatest source of multi-decade growth.

Looking down the road, Whirlpool could be pushing for as much as $19 in EPS by 2018. Considering that it's only paying $3.60 per share annually in dividends, it's feasible that the next five-to-10 years could bring about a push to a $7.20 per share annual payout, if not higher. This is a name income investors aren't going to want to forget about.

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The article 3 Attractive Income Stocks Whose Dividends Could Double originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool recommends RPM International. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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