June 15, 2025 a 11:31 am
SHW: Dividend Analysis - The Sherwin-Williams Company
The Sherwin-Williams Company, a leader in the paints and coatings sector, exhibits a consistent dividend track record spanning 41 years without a significant cut or suspension. The current dividend yield at 0.83% indicates a focus on growth rather than high yield. The company maintains a strong market presence, as reflected in its sizable market cap of over $84 billion.
📊 Overview
Sherwin-Williams operates in a robust sector providing resilience against economic cycles. The company's disciplined dividend strategy is evident in its yield, modest growth rates, and solid payout history.
| Detail | Value |
|---|---|
| Sector | Paints and Coatings |
| Dividend yield | 0.83% |
| Current dividend per share | 2.85 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
🗣️ Dividend History
The long-standing dividend history indicates consistent returns to investors, establishing trust and potential for future income stability. Such historical performance often appeals to conservative investors seeking predictability in cash flows.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.58 |
| 2024 | 2.860 |
| 2023 | 2.42 |
| 2022 | 2.4 |
| 2021 | 2.20 |
📈 Dividend Growth
Assessing the dividend growth over several years is crucial for understanding the company's financial health and shareholder return strategy. Moderate growth reflects stability and potential for sustainable shareholder value enhancement.
| Time | Growth |
|---|---|
| 3 years | 9.14% |
| 5 years | 13.68% |
The average dividend growth is 13.68% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
Understanding payout ratios helps gauge a company's dividend sustainability. A lower ratio typically signals higher retention of earnings for reinvestment or future payout increases.
| Key figure ratio | Value |
|---|---|
| EPS-based | 26.49% |
| Free cash flow-based | 32.79% |
The EPS-based payout ratio of 26.49% and FCF-based of 32.79% depict efficient use of earnings and cash flows, reflecting the company's commitment to balancing shareholder returns with reinvestment opportunities.
Cashflow & Capital Efficiency
An analysis of cash flows and capital efficiency provides insight into a company's operational health and potential for future growth and return on investment.
| 2022 | 2023 | 2024 | |
|---|---|---|---|
| Free Cash Flow Yield | 2.08% | 3.31% | 2.41% |
| Earnings Yield | 3.30% | 2.99% | 3.10% |
| CAPEX to Operating Cash Flow | 33.57% | 25.23% | 33.93% |
| Stock-based Compensation to Revenue | 0.45% | 0.50% | 0.60% |
| Free Cash Flow / Operating Cash Flow Ratio | 66.43% | 74.77% | 66.07% |
The consistent free cash flow and efficient capital use contribute to robust capital reinvestment and shareholder value creation.
Balance Sheet & Leverage Analysis
A comprehensive balance sheet review provides critical insights into financial stability and debt management, crucial for understanding financial risks and sustainability.
| 2022 | 2023 | 2024 | |
|---|---|---|---|
| Debt-to-Equity | 4.03 | 3.18 | 2.94 |
| Debt-to-Assets | 0.55 | 0.51 | 0.50 |
| Debt-to-Capital | 0.80 | 0.76 | 0.75 |
| Net Debt to EBITDA | 3.10 | 2.78 | 2.82 |
| Current Ratio | 0.99 | 0.83 | 0.79 |
| Quick Ratio | 0.55 | 0.48 | 0.46 |
| Financial Leverage | 7.28 | 6.18 | 5.83 |
The gradual decline in debt-to-equity and improved leverage metrics indicate prudent financial management and operational stability.
Fundamental Strength & Profitability
Evaluating profitability and fundamental health reveals the company's ability to sustain growth and efficiently generate returns.
| 2022 | 2023 | 2024 | |
|---|---|---|---|
| Return on Equity | 65.12% | 64.29% | 66.19% |
| Return on Assets | 8.94% | 10.41% | 11.35% |
| Net Margin | 9.12% | 10.36% | 11.61% |
| EBIT Margin | 13.43% | 15.30% | 16.29% |
| EBITDA Margin | 17.94% | 18.00% | 16.33% |
| Gross Margin | 42.10% | 46.67% | 48.47% |
| R&D to Revenue | 0.54% | 0.85% | 0.60% |
The increasing margins and solid returns suggest operational excellence and potential for future scalability.
📉 Price Development
⚠️ Dividend Scoring System
| Criteria | Score | |
|---|---|---|
| Dividend yield | 2 | |
| Dividend Stability | 5 | |
| Dividend growth | 3 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 30/40
✅ Rating
Sherwin-Williams showcases commendable financial stability, robust dividend history, and strategic growth potential. While the dividend yield may be modest, the solid historical and projected earnings growth support the investment thesis for long-term value investors.