RPM International Sees Record Dividend Increases

Shares of RPM International (ticker: RPM) are experiencing a surge as the company approaches a remarkable milestone. In late trading on Wednesday, RPM stock jumped 5.7% to $98.09, outperforming the S&P 500 and Dow Jones Industrial Average, which added 0.6% and 0.2% respectively.

The bullish sentiment can be attributed to comments made by CEO Frank Sullivan ahead of a scheduled shareholder meeting on Thursday. Sullivan hinted at yet another dividend increase, a move that would mark an impressive 50 consecutive years of dividend growth for RPM.

To be recognized as a "dividend aristocrat," companies must increase their annual dividends for 25 consecutive years. With its 50-year track record, RPM sets itself apart as an aristocrat's aristocrat.

While RPM may not be a household name, its brands certainly are. One such brand is Rust-Oleum spray paint, demonstrating the company's dominance in the chemical and coatings industry with annual sales of approximately $7 billion.

At present, RPM stock pays a quarterly dividend of 42 cents per share, equivalent to $1.68 per year. This translates to a yield of about 1.7%.

It is important to note that dividends have a compounding effect. For instance, investing $1,000 in the S&P 500 over a span of 50 years would amount to approximately $150,000. However, investing the same amount in RPM over the same period could potentially yield around $1.15 million, according to Sullivan.

Despite an impressive dividend history, Fermium analyst Frank Mitsch highlights RPM's performance in the fiscal first quarter of 2024, where it achieved a remarkable 12% growth in operating profits and posted record first-quarter results. Mitsch suggests that there is room for catch-up in RPM's market value, as the stock has remained mostly unchanged year to date.

With a "Hold" rating and a target price of $100, Mitsch acknowledges that rising oil prices, which impact RPM's input costs, pose a potential risk.

The sentiment on Wall Street aligns with Mitsch's assessment, with approximately 38% of analysts covering RPM rating the stock as a "Buy". It is important to note that the average Buy-rating ratio for stocks in the S&P 500 stands at around 55%. According to FactSet, the average analyst price target for RPM is approximately $108 per share.

While now may not be the optimal time to invest in RPM shares, its consistent dividend history cements its status as a stock worth monitoring closely.