We recently compiled a list of the 10 Best Dividend Stocks of All Time. In this article, we are going to take a look at where PPG Industries, Inc. (NYSE:PPG) stands against the other dividend stocks.
Dividend stocks aren’t a quick fix for investing; they offer lasting rewards over time. Unfortunately, many investors miss the boat on this and expect to strike it rich overnight. When that doesn’t pan out, they chase the latest stock market trends, ignoring the steady gains that dividend stocks can provide. This trend has been evident over the past year, with AI stocks taking the spotlight and leaving income stocks in the dust. However, there’s a silver lining: many tech companies have begun offering dividends this year, highlighting their long-term potential.
The current yields of these tech stocks might be small, which leads many income investors to overlook their impressive growth records. This is unfortunate because dividend growth can significantly boost both long-term income and capital gains. Analysts believe that dividend growth and sustainability are more crucial than just the yield. For instance, Microsoft’s roughly 864% return over a decade far outpaces the returns from non-tech stocks like AT&T and Chevron, despite their higher yields. The tech giant currently pays $0.75 per quarter and offers a dividend yield of 0.7%. However, you need to keep in mind that its quarterly dividend was $0.28 a decade ago and its dividend yield was 2.5%. Despite the nearly tripling its quarterly dividend, the stock’s yield went down to 0.7% and that was a great thing for its dividend investors.
Dividend stocks are often compared not just with high-yield stocks but also with those that don’t pay dividends to provide investors with a comprehensive view. According to data from Hartford Funds, from 1973 to 2023, dividend-paying companies offered an average annual return of 9.17%, while stocks without dividends only returned 4.27%. The report also noted that companies with stable dividends had an average return of 6.74%, which lagged behind the performance of companies that increased their dividends.
While regularly increasing dividends is challenging, maintaining consistent payouts year after year is also no easy feat for companies. Analysts warn against yield traps—stocks with high yields but unstable dividend policies. Brian Bollinger, president of Simply Safe Dividends, shared his views on dividend investing in a CNBC interview. He recommended focusing on top-quality companies, which often provide dividend yields of around 3% to 4%. These firms usually show steady growth in their dividend payments, boosting the annual income stream and helping to counteract inflation. He also pointed out that stocks with lower yields tend to be safer investments with more reliable payout structures.
In this article, we will take a look at some of the best dividend stocks of all time that have consistent records of paying dividends to shareholders.
Our Methodology:
For this article, we scanned the list of companies that have paid dividends to shareholders for at least 75 years. From that list, we picked companies with dividend yields of above 2%, as of July 23. We analyzed these companies through their balance sheets and overall financial health to determine their dividend stability. Additionally, we assessed the sentiment of hedge funds for each stock using Insider Monkey’s Q1 2024 database. The stocks are arranged in ascending order based on the number of hedge funds that hold stakes in these companies. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A close-up of an artist carefully applying a coat of paint to a wood structure.
PPG Industries, Inc. (NYSE:PPG)
Number of Hedge Fund Holders: 35
Dividend Yield as of July 23: 2.15%
PPG Industries, Inc. (NYSE:PPG) is an American paint and coating manufacturing company that also deals in other specialty materials. The company reported mixed earnings in the second quarter of 2024, generating $4.8 billion in revenues, almost the same as in the same period last year. The company reported growth in margin segments by 110 basis points compared to the previous year, marking the seventh quarter in a row of margin growth. In addition, the company reached record highs in both reported EPS and adjusted EPS, with adjusted EPS increasing by 11% YoY, which was its sixth consecutive quarter of growth. While overall organic sales remained flat, several of the company’s businesses saw growth, including aerospace coatings, packaging coatings, architectural coatings in the Americas and Asia Pacific, traffic solutions, and specialty coatings and materials.
PPG Industries, Inc. (NYSE:PPG) has gained significantly from its European presence. In the early 1900s, it was among the first U.S. firms to enter the European market, acquiring a glass plant in Belgium. During the 1920s, the company saw steady growth thanks to its glass and paint divisions, which benefited from the booming automotive industry and the rise of skyscrapers. It anticipates that demand in Europe will stabilize in the third quarter of 2024 and FY24, while it expects continued growth in China and Mexico.
On July 18, PPG Industries, Inc. (NYSE:PPG) declared a 4.6% hike in its quarterly dividend to $0.68 per share. This was the company’s 53rd consecutive year of dividend growth, which makes PPG one of the best dividend stocks of all time. In addition, the company has paid dividends regularly in the past 125 years. The stock has a dividend yield of 2.15%, as of July 23.
As per Insider Monkey’s database of Q1 2024, 35 hedge funds owned stakes in PPG Industries, Inc. (NYSE:PPG), compared with 39 in the previous quarter. These stakes have a collective value of nearly $758 million. Among these hedge funds, First Eagle Investment Management was the company’s leading stakeholder in Q1.
Overall PPG ranks 6th on our list of the best dividend stocks to buy. You can visit 10 Best Dividend Stocks of All Time to see the other dividend stocks that are on hedge funds’ radar. While we acknowledge the potential of PPG as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than PPG but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.