Sherwin-Williams - >>> Sherwin-Williams is the world's largest paint and coating manufacturer, recording an all-time-high $22 billion in sales in the last year. However, facing pandemic-aided figures from late 2020 and early 2021, Sherwin Williams saw its stock price drop 15% over the last year.
It was further plagued by higher raw material prices from an inflationary environment, causing its cost of goods sold to balloon.
Ultimately, Sherwin-Williams sees incredible efficiencies during boom cycles when all is well through its global, end-to-end supply chain. However, it also has to put out a lot of fires in more difficult times, making it somewhat cyclical.
So facing these temporary issues -- what makes Sherwin-Williams an all-weather stock to add $1,000 to today?
First, it has a wide moat thanks to cost advantages from its supply chain, its efficient scale in the paint industry, and its vast network of almost 5,000 stores worldwide. Proving the power of this moat, the company has averaged a return on invested capital (ROIC) of 19% over the last two decades.
A stock's ROIC shows its profitability compared to its overall debt and equity. For example, Sherwin-Williams' average of 19% since 2002 would place it in the top quartile of ROICs among the current stocks in the S&P 500 index. These top-tier ROIC generators are proven to outperform their peers over time, highlighting the value wide moats generate.
Furthermore, Sherwin-Williams has become a shareholder returns wizard thanks to this strong profitability. While the company only raised its 1% dividend by $0.02 in 2023 as a precaution with today's environment, it managed to increase its dividends by 331% in the last decade. This dividend only amounts to 27% of its net income, leaving room for future raises -- adding to its 44 years of consecutive dividend increases.
On top of this, the company also continues to reward investors with steady stock buybacks, lowering its outstanding shares by 16% over the last 10 years.
With a price-to-earnings ratio of 31, Sherwin-Williams's steady business commands a premium. However, its wide moat, strong shareholder returns, and stable profitability in trying times make Sherwin-Williams an outstanding all-weather dividend stock to buy after its recent drop.
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