PPG Industries (PPG) is a Dividend Aristocrat. It has increased its dividend for 44 years in a row, which is certainly an impressive feat.
That said, there may be a better Dividend Aristocrat to buy, and it happens to be one of PPG’s biggest competitors.
Sherwin-Williams (SHW) has 38 consecutive years of dividend increases under its belt.
PPG has a higher dividend yield than Sherwin-Williams right now, but Sherwin-Williams has stronger growth potential going forward.
This article will discuss why Sherwin-Williams is the better Dividend Aristocrat, in a matchup of two giants of the paint and coatings industry.
Business Overview
Winner: Sherwin-Williams
Sherwin-Williams and PPG compete directly in the paint industry.
Sherwin-Williams operates four business segments:
The Paint Stores business is by far Sherwin-Williams’ largest. It owns more than 4,000 stores. It also provides protective and marine services, automotive finishes, and product finishes.
Source: 2016 Financial Community Presentation, slide 5
Sherwin-Williams generated 4.6% revenue growth in 2016. Diluted earnings-per-share increased 7.5% for the year, to $11.99.
PPG supplies paints just like Sherwin-Williams, along with other manufactured products including coatings, optical products, and specialty materials.
It operates three segments:
PPG serves the industrial, transportation, consumer products, and construction industries. It generates approximately $15 billion in annual sales.
It has significantly shifted its business model toward Performance Coatings in recent years. This transformation worked, as the Performance Coatings segment posted 10% compound annual growth from 2005-2016.
