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RPM International (RPM) Cheers Investors With 5.3% Dividend Hike

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RPM International Inc. (RPM - Free Report) announced a hike of 5.3% in its quarterly cash dividend. This move highlights the company’s sound and stable financial position and its commitment to reward shareholders regularly. RPM has been driving shareholder value through regular dividend payments and this marks the company’s 48th consecutive year of increasing its cash dividend.

RPM raised the quarterly dividend payout to 40 cents per share (or $1.60 annually) from 38 cents (or $1.52 annually). The amount will be paid on Oct 29, 2021, to shareholders of record as of Oct 18. Based on the closing price of $79.8 per share on Oct 7, 2021, the stock has a dividend yield of 2%.

Concerning this, Frank C. Sullivan, chairman and CEO of RPM, said, “Combined with an appreciating stock price, increasing the dividend enables us to consistently deliver long-term value and outperform the cumulative total return of the broader market.”

Investors always prefer an income-generating stock. Hence a high-dividend-yielding one is much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet on.

Factors Supporting Dividend Hikes

RPM follows a systematic inorganic strategy to enhance its portfolio. Acquisitions have been an important part of RPM’s growth strategy. The company made three buyouts in fiscal 2020, five in fiscal 2019 and seven in fiscal 2018. Acquisitions added 1.1% to its net sales in fiscal 2020 and 1.4% in fiscal 2019. In the first six months of fiscal 2021, acquisitions contributed 1.4% to sales.

In September 2020, RPM’s Rust-Oleum business acquired a leading manufacturer of sandpaper and other abrasives, Ali Industries, LLC (which is commercially known as Gator Finishing Products). Ali Industries is an excellent fit for RPM’s Consumer Group segment. It enhances the unit’s surface preparation capabilities by adding abrasives to its patch, repair, and cleaning product lineup.

On Dec 18, 2019, RPM announced that its Mantrose-Haeuser business unit acquired Elgin, IL-based manufacturer of dry stabilizer and emulsifier blends for the food industry — Profile Food Ingredients, LLC. The buyout opens up significant opportunities to leverage the combined sales forces of the entities, expand sales of specialty ingredients to the food industry and broaden RPM’s reach in international markets.

RPM’s shares have dropped 12.1% against the Zacks Paints and Related Products industry’s 14.3% rally. Although the stock’s gains lagged the industry’s rally, the company has a robust earnings surprise history, surpassing the Zacks Consensus Estimate in the trailing 10 quarters. The company has benefited from a strategic business operation and the successful implementation of the MAP to Growth improvement program.

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Zacks Rank & Key Picks

Currently, RPM carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the Construction Sector are M/I Homes, Inc. (MHO - Free Report) , Loma Negra Compañía Industrial Argentina Sociedad Anónima (LOMA - Free Report) and Landsea Homes Corporation (LSEA - Free Report) . M/I Homes sports a Zacks Rank #1 (Strong Buy), while Loma Negra and Landsea Homes carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

M/I Homes’ earnings for 2021 are expected to grow 63.3%.

Loma Negra has a three-to-five-year earnings per share growth rate of 26.3%.

Landsea Homes has a trailing four-quarter earnings surprise of 68.3%, on average.

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