PPG Industries (PPG) Could Be a Great Choice
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Headquartered in Pittsburgh, PPG Industries (PPG) is a Basic Materials stock that has seen a price change of -11.16% so far this year. The paint and coatings maker is currently shelling out a dividend of $0.68 per share, with a dividend yield of 2.56%. This compares to the Chemical - Specialty industry's yield of 1.08% and the S&P 500's yield of 1.51%.
Looking at dividend growth, the company's current annualized dividend of $2.72 is up 2.3% from last year. Over the last 5 years, PPG Industries has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.52%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. PPG Industries's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, PPG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $7.89 per share, with earnings expected to increase 0.25% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PPG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
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PPG Industries, Inc. (PPG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
