April 22, 2025 a 11:31 am
PPG: Dividend Analysis - PPG Industries, Inc.
PPG Industries, Inc. has displayed a consistent approach to dividend payments, marked by a long history of uninterrupted distributions to shareholders. Its attractive yield combined with steady growth provides a compelling narrative for dividend-focused investors. While the payout ratios reflect caution, the firm seems well-poised for sustainable dividend policies.
Overview
| Factor | Details |
|---|---|
| Sector | Constructive Materials |
| Dividend yield | 2.74 % |
| Current dividend per share | 2.67 USD |
| Dividend history | 43 years |
| Last cut or suspension | None |
Dividend History
Maintaining a 43-year track record of dividend payments, PPG shows its commitment to shareholder returns. This long history is a testament to its robust financial health and operational resilience, fostering trust among its investor base.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.36 |
| 2024 | 2.66 |
| 2023 | 2.54 |
| 2022 | 2.42 |
| 2021 | 2.26 |
Dividend Growth
PPG's dividend growth rates of 3-5% over the past years underscore its commitment to returning value to shareholders. Steady increments in dividend payments enhance investor confidence and reflect favorable earnings prospects.
| Time | Growth |
|---|---|
| 3 years | 5.58 % |
| 5 years | 6.08 % |
The average dividend growth is 6.08% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio
The payout ratio is a critical measure of sustainability. With a 55.73% EPS-based payout and an 86.57% cash flow-based payout, PPG displays both commitment and risk management in its dividend strategy.
| Key figure | Ratio |
|---|---|
| EPS-based | 55.73 % |
| Free cash flow-based | 86.57 % |
The EPS-based payout ratio of 55.73% suggests room for future growth, while the higher FCF coverage requires prudent financial discipline.
Cashflow & Capital Efficiency
An analysis of cash flow and capital efficiency reveals the operational and fiscal discipline of a corporation. It helps in understanding the company’s ability to generate free cash flow, earnings yield, and its investment dynamics.
| Year | Free Cash Flow Yield | Earnings Yield | CAPEX/Operating Cash Flow | Stock-based Compensation/Revenue | Free Cash Flow/Operating Cash Flow Ratio |
|---|---|---|---|---|---|
| 2024 | 2.51 % | 4.94 % | 50.77 % | 0.27 % | 49.23 % |
| 2023 | 5.28 % | 3.60 % | 22.77 % | 0.32 % | 77.23 % |
| 2022 | 1.50 % | 3.46 % | 53.79 % | 0.20 % | 46.21 % |
PPG's free cash flow yield is indicative of its efficiency in generating cash relative to size. The CAPEX ratio and stock-based compensation represent sound operational strategies, enhancing capital efficiency and productivity.
Balance Sheet & Leverage Analysis
PPG's balance sheet robustness is reflected through leverage ratios and liquidity metrics. Debt-to-equity ratios and current ratios are essential indicators to evaluate long-term financial health, debt servicing freedom, and solvency risk.
| Year | Debt-to-Equity | Debt-to-Assets | Debt-to-Capital | Net Debt to EBITDA | Current Ratio | Quick Ratio | Financial Leverage |
|---|---|---|---|---|---|---|---|
| 2024 | 94.25 % | 32.91 % | 48.52 % | 1.96 | N/A | 93.96 % | 286.41 % |
| 2023 | 87.72 % | 31.74 % | 46.73 % | 2.06 | N/A | 104.95 % | 276.39 % |
| 2022 | 115.82 % | 36.81 % | 53.67 % | 2.75 | N/A | 103.81 % | 314.68 % |
While PPG's leverage ratios suggest moderate dependency on external financing, its liquidity metrics reassure its capacity to manage short-term obligations efficiently, thus guaranteeing financial stability.
Fundamental Strength & Profitability
PPG Industries' profitability indicators, from return on equity to margins, depict its efficiency in converting sales into profits. Evaluating R&D expenditures provides insights into innovation and future growth potential.
| Year | Return on Equity | Return on Assets | Return on Invested Capital | Net Margin | EBIT Margin | EBITDA Margin | Gross Margin | R&D to Revenue |
|---|---|---|---|---|---|---|---|---|
| 2024 | 20.29 % | 7.09 % | 10.98 % | 8.69 % | 13.21 % | 16.31 % | 41.61 % | 2.67 % |
| 2023 | 16.22 % | 5.87 % | 12.20 % | 6.96 % | 10.94 % | 14.26 % | 41.36 % | 2.37 % |
| 2022 | 15.56 % | 4.95 % | 7.88 % | 5.81 % | 8.91 % | 13.48 % | 37.14 % | 2.54 % |
PPG's return metrics depict effective utilization of shareholders’ funds alongside respectable profitability margins. Investments in R&D outlines its strategic approach towards sustaining growth and profitability.
Price Development
Dividend Scoring System
| Category | Description | Score |
|---|---|---|
| Dividend yield | a notable income stream for shareholders. | |
| Dividend Stability | 43-year history exemplifies reliability. | |
| Dividend growth | steadily increasing year on year. | |
| Payout ratio | sustainable distribution policy. | |
| Financial stability | solid balance sheet showcases financial health. | |
| Dividend continuity | consistent throughout various economic cycles. | |
| Cashflow Coverage | reflects operational efficiency and capability. | |
| Balance Sheet Quality | strong liquidity and adequate leverage management. |
Total Score: 39/40
Rating
PPG Industries receives a strong rating based on its robust dividend tradition, promising growth trajectory, and an impressive balance sheet. It represents a compelling opportunity for dividend-focused investors looking for sustained income coupled with moderate growth.