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Sherwin-Williams Scales 52-Week High on Dividend Hike - Analyst Blog

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Shares of Sherwin-Williams ( SHW ) crafted a 52-week high yet again after the company bumped up its quarterly dividend by 22%. The Ohio-based paint giant's shares touched a new 52-week high of $288.20 yesterday before pulling back a bit to end the day at $288.05.

Sherwin-Williams, which has a market cap of roughly $28 billion, has racked up a one-year return of 51.6%, much higher than the S&P 500's corresponding return of 16.4%. Average volume of shares traded over the last three months is roughly 626.7K. The company's long-term projected earnings per share growth is around 14.2%.

Driving Factors

Sherwin-Williams yesterday announced a raise in its quarterly dividend to 67 cents per share ($2.68 per share annualized) from the previous payout of 55 cents per share. The revised dividend is payable on Mar 13, 2015, to shareholders of record as of Mar 2, 2015. The hike follows 36 straight years of dividend increase.

Sherwin-Williams remains committed to deliver incremental returns to shareholders leveraging healthy cash flows. Robust working capital management helped the company to generate healthy cash from operations of $1.08 billion in 2014. Sherwin-Williams returned over $1.7 billion to its shareholders in 2014 through dividends and share repurchases.

Sherwin-Williams, a Zacks Rank #2 (Buy) stock, follows a strategy of growth through acquisitions and internal initiatives such as efficient working capital management and innovation. The company's philosophy is to diversify its customer base and expand its operations into various geographies.

The acquisition of the U.S. and Canadian businesses of Consorcio Comex S.A. de C.V. has ushered in significant opportunity for Sherwin-Williams. The buyout will enable it to better serve its customers across some of its key markets.

Sherwin-Williams also continues to invest in its Paint Stores Group segment to boost market share. The company added 95 stores during 2014 in this division and plans are in place to add 100 to 110 stores this year. It sees encouraging demand trends for paints and coatings in the domestic market in 2015.

Sherwin-Williams' aggressive cost control initiatives, working capital reductions, supply chain optimization and productivity improvement is expected to continue to yield margin benefits.

Other Stocks to Consider

Other companies in the basic materials space worth considering include Innophos Holdings Inc ( IPHS ), Air Products & Chemicals Inc. ( APD ) and Valhi, Inc. ( VHI ). While Innophos holds a Zacks Rank #1 (Strong Buy), both Air Products and Valhi carry a Zacks Rank #2 (Buy).

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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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