Is PPG Industries a Dividend Stock to Buy?

The nice thing about paintings and coatings company PPG Industries (NYSE: PPG  ) is that the stock offers something for growth- and income-seeking investors alike. One one hand, analysts expect the stock to grow its earnings in the mid-teens for the next couple of years. On the other, the company is a Dividend Aristocrat, having raised its payout for 42 years in a row. If you're an income investor, is now the time to buy into PPG Industries? Let's take a closer look.

A Dividend Aristocrat, but also a cyclical stock

The key to growing a dividend is a combination of generating good return on equity, or ROE, and having the earnings and free cash flow to reinvest in the business. In other words, companies need to generate good ROE (net income from shareholder equity) and then use whatever earnings are left over, after dividends have been paid, to reinvest so as to generate growth.


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