Dividend Increase | Sherwin Williams $SHW #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Sherwin Williams for another dividend increase!

There's 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 prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

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 pay raise just for owning a small piece of a company?  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  

On February 14th the Board of Directors at Sherwin Williams (SHW) announced an increase to their quarterly dividend payment.  The dividend was increased from $0.605 to $0.715 which is an excellent 18.2% increase.  Shares currently yield 0.89% based on the new annualized payout.

The new dividend rate will be payable March 8th to shareholders of record around February 26th.

Since I own 25.071 shares of Sherwin Williams in my Rollover IRA, this raise increased my forward 12-month dividends by $11.03.  This is the 4th raise I've received from Sherwin Williams since initiating a position in 2021 with the total organic dividend growth over that time coming to 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.  Case in point last years anemic 0.8% increase; however, this years raise more than made up for that and over time dividend growth has been fantastic.  The "worst", if you can even call it that, 10-year growth rate is still an extremely impressive 9.4%.  Sherwin Williams' dividend growth streak is 32 years young giving them the title of Dividend Champion.

Since 1993, Sherwin Williams' year over year dividend growth has ranged from 0.8% to 100.0% with an average of 15.7% and a median of 11.8%.

There's been 27 rolling 5-year periods over that time with annualized dividend growth spanning from 4.4% to 29.2% with an average of 13.5% and a median of 13.7%.

Over that time there's also been 22 rolling 10-year periods with Sherwin Williams' annualized dividend growth coming between 9.4% to 17.3% with an average of 12.7% and 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 following chart.  

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/over value area to be to between 10%-20% deviation from the average and significant over/under value are greater than a 20% deviation from the average.

A full screen version of this chart can be found here.

Sherwin Williams' 5-year average forward dividend yield is 0.90% which corresponds to a share price of $318 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 5-year moving average yield +/- 10%.  That gives a fair value range of $289 - $353 and suggests that shares are currently trading right around fair value.

Wrap Up

This raise increased my forward dividends by $11.03 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my Rollover IRA's current yield of 2.40% this raise is like I invested an extra $460 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way. 

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

This is the 6th dividend increase I've received from the companies in my Rollover IRA.  Combined those raises have increased my forward 12-month dividends by $66.80.

My FI Portfolio's forward-12 month dividends are $12,313.92  Including my FolioFirst portfolio's forward dividends of $251.89 brings my total taxable accounts dividends to $12,565.81.  My Roth IRA's forward 12-month dividends are $1,246.88.  My Rollover IRA's forward dividends are $5,148.33.  Across all accounts I can expect to receive $18,961.02 in dividends over the next year.

I've also started compiling dividend data on many of the companies that I own or would like to own.  Sherwin Williams' can be found here which includes the dividend history (as far back as I can find without spending hours hunting it down), rolling dividend growth rates and dividend yield theory.  To see other companies that I've already gathered the data on you can check out the Dividend Companies page.  Check it out and let me know what you think.

Do you own shares of Sherwin Williams?  Do you think they can continue their torrid pace of dividend growth?

Please share your thoughts below.