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| Getting a raise while sitting on the couch? Sign me up! Thanks to Sherwin Williams for another dividend increase! |
There is an old Chinese proverb that says “the best time to plant a tree was 20 years ago, the next best time is now”. The reason for this is that it takes time for a tree to grow and thrive and to begin seedingits benefits. Dividend growth investing is about the same way. It takes consistent saving and investing, as well as time and patience to allow the power of dividend growth.
That’s why one of my favorite things is when one of the companies I own decides to pay out more in dividends. You mean I get a raise just for owning a small piece of a company? I don’t go and do R&D on new products or technology. It does not sell any products. It does not manage employees or inventory. Not making sales calls. All I had to do was have the foresight to invest some of my savings great companies.
On February 14, the Sherwin Williams (SHW) Board of Directors announced an increase in its quarterly dividend payment. The dividend increased from $0.605 to $0.715 which is an outstanding increase of 18.2%. Shares currently yield 0.89% based on the new annual payout.
The new dividend rate will be paid on March 8th to shareholders of record around February 26th.
Since I own 25,071 shares of Sherwin Williams in my Rollover IRA, this increase increased my future 12 month dividends by $11.03. This is the 4th increase I have received from Servin Williams since I started a position in 2021, with the total organic dividend increase over that period reaching 60%.
A full screen version of this chart can be found here.
Sherwin Williams’ dividend growth isn’t the most consistent from year to year. Incidents in recent years anemic increase of 0.8%; However, this year the dividend growth has been fantastic. At “worst,” if you can call it that, the 10-year growth rate is still an extremely impressive 9.4%. Sherwin Williams’ dividend growth streak is 32 years, earning it the title of Dividend Champion.
Since 1993, Sherwin Williams’ annual dividend growth has ranged from 0.8% to 100.0% with an average of 15.7% and a median of 11.8%.
There have been 27 rolling 5-year periods during this period with annual dividend growth ranging from 4.4% to 29.2% with a mean of 13.5% and a median of 13.7%.
During this time there have also been 22 rolling decades with Sherwin Williams’ annual dividend growth ranging between 9.4% and 17.3% with a mean of 12.7% and a median of 12.4%.
The 1, 3, 5 and 10 year rolling dividend growth rates for Sherwin Williams since 1993 can be found in the chart below.
A full screen version of this chart can be found here.
For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 5 year moving average, the under/overvalue range is between 10%-20% deviation from the mean and The significant over/under is greater than a 20% deviation from the mean.
You can find a full screen version of this chart here.
Sherwin Williams’ 5-year average forward dividend yield is 0.90% corresponding to a share price of $318 based on the new annual payout.
I find the fair value range based on dividend yield theory to be the 5 year moving average yield +/- 10%. This gives a fair value range of $289 – $353 and suggests that shares are currently trading around fair value.
Wrap up
This increase increased my forward dividends by $11.03 with zero effort on my part. That’s right, absolutely nothing to contribute to their functions. Based on my current Rollover IRA yield of 2.40%, that increase is like I invested an additional $460 in capital. Except I didn’t! One of the companies I own just decided to send more cash my way.
So you can eventually reach the intersection where your dividends received exceed your expenses. This is INVESTMENT IN DIVIDEND GROWTH BUSINESS! The beauty of the dividend growth investing strategy is that you create your dividends through new capital investments as well as dividend increases from the companies you own.
This is the 6th dividend increase I have received from the companies in my Rollover IRA. Combined these increases increased my future 12 month dividends by $66.80.
My FI Portfolio12 month forward dividends are $12,313.92 Including my FolioFirst The forward portfolio dividends of $251.89 bring my accounts total taxable dividends to $12,565.81. My Roth IRA’s 12-month forward dividends are $1,246.88. My Rollover IRA’s term dividends are $5,148.33. On all accounts, I expect to receive $18,961.02 in dividends next year.
I also started compiling dividend data on many of the companies I own or would like to own. Sherwin Williams can be found here which includes dividend history (as much as I can find without spending hours hunting it down), rolling dividend growth rates, and dividend yield theory. To see other companies I’ve already collected the data for, you can check out Dividend Companies page. Check it out and let me know what you think.
Do you own Sherwin Williams stock? Do you think they can continue their terrific rate of dividend growth?
Please share your thoughts below.
