Sherwin-Williams (NYSE:SHW) Has Affirmed Its Dividend Of $0.605

The board of The Sherwin-Williams Company (NYSE:SHW) has announced that it will pay a dividend of $0.605 per share on the 8th of September. This payment means the dividend yield will be 0.9%, which is below the average for the industry.

Check out our latest analysis for Sherwin-Williams

Sherwin-Williams' Earnings Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Sherwin-Williams' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 23.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sherwin-Williams Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.52, compared to the most recent full-year payment of $2.42. This means that it has been growing its distributions at 17% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See Sherwin-Williams' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Sherwin-Williams has seen EPS rising for the last five years, at 6.9% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Sherwin-Williams Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Sherwin-Williams might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Sherwin-Williams that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.