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PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials worldwide. The company's Performance Coatings segment offers coatings, solvents, adhesives, etc.  for agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, transportation vehicles. It also provides coatings and finishes for the protection of metals and structures, such as metal fabricators, heavy duty maintenance contractors, and manufacturers of ships, bridges, and rail cars etc.

Thus, PPG Industries operates in the Basic Materials sector, but it has definitely bucking that trend.  Since a picture is worth a 1000 words, here is the XLB, the SPDR Materials EFT, which shows momentum has stalled,

 ![](https://cdn.steemitimages.com/DQmTpEfhDEtYRFuvMtW55rm5mvRgUtKxHg86e9eAjU18YJy/image.png)

vs PPG, which just broke out.

 ![](https://cdn.steemitimages.com/DQmSiVNiR1SbmxgGVnJd1EUfjWxrJbpCZFpACnXNAnwwnsF/image.png)

But for this post, I want to focus on PPG Industries and its dividends.  In life if you aren’t learning every day, then you are dying.  Case in point, prior to today, I didn’t know what a Dividend Aristocrat was.  Nevertheless, a Dividend Aristocrats are companies that have increased their dividend payouts for 25 consecutive years or more.  Another term that I learned today, which I’m adding to my arsenal of tools to evaluate dividend paying companies is the Gordon Growth Model.  This model is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate.  Essentially it calculates (theoretically) the annual rate at which a company can grow its dividend, you can then calculate a stock price’s rate of return.

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Once you know PPG's RoE, you can then calculate how much it can grow its dividend every year (g) in the following manner:

g = RoE*(1-dps/eps)

dps: dividend per share

eps: earnings per share

g: the rate at which PPG can grow its dividend

RoE: return on equity

My estimation of a reasonable RoE for PPG is 24%. I'll come back to this a bit later, as it's the key to the investment case and essentially determines every number you will read from now on.

Based on the current annualized dividend of $2.04 and estimated 2019 earnings per share of $6.25, and estimated RoE; the annual rate at which PPG can grow its dividend works out to be 16.2%

Calculating a theoretical return for PPG stock

Using the Gordon Growth Model, you can calculate a theoretical return for an investment in PPG at the current price of $128. This is calculated as follows:

P = dps/(r-g)

P: share price

r: cost of equity capital, or theoretical rate of return

Since we already know g = 16.2% and current dps = $2.04 and P = $128, it follows that r = 17.8%.

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<center><a href="https://www.fool.com/investing/2019/11/25/is-ppg-industries-a-great-dividend-stock.aspx">Source</a></center>

As a person that focuses on the technicals and the macro environment, my fundamental arsenal just go a lot better.  Speaking of the technnicals, after consolidating for four years, price recently broke out.

![](https://cdn.steemitimages.com/DQmWkS7duJ1Q2MhzSxvefVuuTHtUcRaGdoaJe8TnuPURpqy/image.png)

Breakouts usually retest where they broke out, and well the trade set-up on the daily chart was missed last week. 

![](https://cdn.steemitimages.com/DQmcx4sawypAe9CNCbQt15M36D7iXBQSUAKAfAhE8FfiXv7/image.png)

But because price didn’t penetrated the zone much, the chart suggests to go long if and when price penetrates the zone a bit more, with a stop below #123.

![](https://cdn.steemitimages.com/DQmNgr1HorXCWnirbGiVjX49e9uHoDAZHVST21hMmuaj1ZY/image.png)

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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