How To Earn $500 From Sherwin-Williams In Dividends

Ohio-based paints and coatings company Sherwin-Williams Co SHW is among the strongest dividend-paying companies, with 45 consecutive years of dividend growth. The company’s latest dividend increase came in February 2024 when it hiked its quarterly payout by 18.2%.

Sherwin-Williams shares have gained about 19% over the past year. 

During the first quarter, Sherwin-Williams' profit jumped 6.4% to $2.17 per share, while revenue fell 1.4% to $5.4 billion. Both metrics missed Wall Street consensus estimates as macroeconomic volatility continues to affect the housing and DIY markets due to a decline in consumer spending. However, analysts believe the company is poised for a strong rebound in business following the anticipated beginning of interest rate cuts, as residential housing and renovation activity is expected to return to normal levels. Morgan Stanley recommended several stocks to investors in May 2024 to navigate macroeconomic volatility, adding Sherwin-Williams to its high-quality growth stocks basket.

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 In April 2024, KeyBanc upgraded the stock to Overweight from Sector Weight, citing the expected rebound in paints and coatings segments. KeyBanc's analyst Aleksey Yefremov acknowledged the company's weak first-quarter results but emphasized focusing on Sherwin-Williams' "volume recovery story" expected to unfold in 2025-2026. The analyst expects the stock to benefit from a recovery in housing and industries. 

Sherwin-Williams' free cash flow has grown at a compound annual growth rate (CAGR) of 13% over the past decade. The company's Total Debt to EBITDA ratio of 2.33 is also acceptable given the strong free cash flow generation and long-term growth estimates. Analysts believe the company has a moat in the paints business, which accounts for over 50% of its revenue, due to its 4,800 company-operated store network. Wall Street analysts expect Sherwin-Williams' earnings to grow 11.9% next year.

Since Sherwin-Williams has a strong dividend growth history and its financials indicate the company is set to continue providing regular payouts, let's examine how much you need to invest in the company to make $500 a month in dividends.

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How to Make $500 Per Month in Dividends from Sherwin-Williams

First, we will calculate the number of Sherwin-Williams shares you need to buy to reach the $500 per month goal. An income of $500 per month means you will generate $6,000 per year in dividends. Sherwin-Williams pays a quarterly dividend of $0.715 per share, which amounts to $2.86 annually ($0.715 x 4 = $2.86).

Now let's calculate the number of shares you need to buy:

Number of shares needed = $6,000 / $2.86 = 2,097.90

To earn $500 a month from Sherwin-Williams, you need to buy approximately 2,098 shares of the company.

Total Investment Needed to Earn $500 a Month from Sherwin-Williams

To calculate the investment needed to reach the $500/month goal in dividends from Sherwin-Williams, multiply the total number of shares by the stock’s latest price. Sherwin-Williams closed at $294.68 on June 25

Total Investment Needed to Earn $500/month from Sherwin-Williams Dividends = $294.68 x 2,098 = $618,238.64

You’d need to invest about $618,239 in Sherwin-Williams to start earning $500 per month in dividends.

Before investing this hefty sum in the company, it'd be wise to consider the risks involved, given the volatility of the housing market, where new projects remain capped amid a decline in consumer spending and interest rates.

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