Dividend Aristocrat Overview: The Sherwin-Williams Company

About The Sherwin-Williams Company

Sherwin-Williams is the largest manufacturer of paints and coatings in the United States and the third largest in the world. The company holds over 500 patents and a roster of well-known brand names including Dutch Boy, Krylon, Minwax, Thompson’s Water Seal, and of course the eponymous Sherwin-Williams paints.

The company traces its heritage back to right after the civil war. In 1866, Henry Sherwin became a partner in Truman, Dunham & Company, which specialized in selling paint ingredients, brushes and glass and other decorating products. The partnership dissolved in 1870, and on February 3rd, 1870 – with partner Edward Williams – Sherwin, Williams & Company was born.

For the next 15 years, the company developed new technologies including resealable tin cans and the first successful ready-mixed paint. Sherwin-Williams was incorporated in 1884 and issued its first dividend in 1885. The company continued to innovate and expanded internationally, beginning with Canada in 1895. Sherwin-Williams introduced varnish and insecticide in 1898 and linseed oil production in 1902. The company created an organic chemical business from scratch in 1915 when World War I resulted in the cut off of aniline oil and other chemicals used in paint production from Germany. Through the Depression, World War II and the post-war years, Sherwin-Williams continued to expand – right up until the 1970s.

Since 1885, Sherwin-Williams had paid a dividend to investors. However, during a period of rapid expansion in the 1970s the company took on a heavy debt load. This, combined with operating losses, forced the company to suspend its common stock dividend in 1977. Two years later, Sherwin-Williams reinitiated the dividend and the company has increased it every year since.

In 2013, Sherwin-Williams recorded $753 million in net income, up 19.3% from 2012. The company increased revenues from 2012 to 2013 by 6.8%, to $10.186 billion.

Sherwin-Williams is a member of the S&P 500 index and a Fortune 500 company; its stock trades under the ticker symbol SHW.

Sherwin-Williams’ Dividend and Stock Split History

Sherwin-Williams has grown their stock dividend at a compounded rate of over 12% per year over the last decade.

Sherwin-Williams has grown its dividend at an annual compounded rate of over 12% over the last decade.

Sherwin-Williams has increased dividends since 1979 and met the Dividend Aristocrat criteria of 25 consecutive years of dividend increases in 2003. The company makes regular dividend payments at the beginning of March, June, September and December; the dividend increase is usually announced with the March dividend payment. In March 2013, Sherwin-Williams increased its quarterly dividend by 10%, from 50 cents to 55 cents per share.

Sherwin-Williams has an above average record of dividend increases. Averaged out, the dividend increases are very consistent. The company’s 5-year compounded annual dividend growth rate (CADGR) is 9.15% while the 10-year CADGR is 12.46%. Longer term, Sherwin-Williams’ dividend growth rate is similar, with 20- and 25-year CADGRs of 10.86% and 10.53%.

Sherwin-Williams has split its stock 5 times since 1981. The company split its stock 2-for-1 in January of 1981, 1983, 1986, 1991 and – most recently – in 1997.

From mid-2009 to mid-2014, Sherwin-Williams stock appreciated from about $49 to $207, resulting in an annualized rate of over 33%. This significantly outpaced the 14.3% annualized return of the S&P 500 during the same time. These returns do not include the effect of reinvesting dividends.

Direct Purchase and Dividend Reinvestment Plans

Sherwin-Williams has both direct purchase and dividend reinvestment plans. The plans are only open to existing shareholders of Sherwin-Williams stock. What this means is that if you do not currently own any Sherwin-Williams stock, you have to buy at least one share through a broker and then have the shares transferred into your own name. (When you own shares through a broker, from the company’s perspective the broker is the registered shareholder. The broker then keeps track of the various company stock that you own.) Investors interested in participating in either of these plans can find information at Wells Fargo’s ShareOwner Online Investment Plan site. If you’re interested in directly purchasing Sherwin-Williams stock, the minimum purchase is $10 whether investing by check or by automatic debit.

The plans are very friendly to investors, as Sherwin-Williams pays all of the purchase fees to encourage employees and investors to buy shares through the plan. There is no initial fee to start participating in the plans. You will pay fees when you sell your shares through the plan: between $15 to $30, depending on the type of sales order (batch, market, limit, or stop) plus 10 cents per share sold. You’ll also pay $5 to have the proceeds directly deposited to your savings or checking account.

Helpful Links

The Sherwin-Williams Company’s Investor Relations Website

Current quote and financial summary for The Sherwin-Williams Company (finviz.com)

Information on the direct purchase and dividend reinvestment plans for SHW

(Look for “The Sherwin-Williams Company” under Dividend Reinvestment Plans Companies.

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.