Time for a Performance Check

For some background on the idea behind the Performance Check, and the XIRR function used for the calculations, please see my first post in this series – Performance Check – PG

I’m continuing my performance check series with a look at the second dividend paying stock I ever purchased for my Portfolio.  The stock is RPM International (RPM), which is part of the Materials sector.

From the company’s website…. “RPM International Inc. owns subsidiaries that manufacture and market high-performance coatings, sealants and specialty chemicals, primarily for maintenance and improvement applications.  RPM employs more than 14,000 people worldwide and operates 139 manufacturing facilities in 27 countries. Its products are sold in approximately 170 countries and territories.  Fiscal 2017 sales were $5 billion, with 66 percent to industrial and specialty markets worldwide and the remaining 34 percent to consumers mainly in North America.”

RPM has three main product segments – Consumer, Industial, and Specialty.  Many people may not be familiar with RPM stock, but you’re probably familiar with many of its brands, including Rust-Oleum, Dap, Zinsser, Stonhard, and Carboline to name a few.

RPM has a long history of increasing its dividend, having done so for the past 44 years, including an annual increase announced this past week of 6.67%.

Like my PG position, my RPM position is one I initiated many years ago.  So again, I have lots of data/time to factor into the return calculated in this Performance Check.

 

My Personal Performance for RPM

My initial purchase of RPM came in the spring of 1996 in a Dividend Reinvestment Plan, or DRiP, that I opened at the same time.

Below is a capture of the spreadsheet I keep with the RPM cash flows, and the calculated XIRR.  The table is a bit long for this post due to all the entries, so I broke it up into 2 pieces, duplicating the header each time.

Here are some notes with regard to the ‘Type’ column entries:

OCP = Optional Cash Purchase;  OCW = Optional Cash Withdrawal;  EOY Value = End Of Year Value

Note – the prices reflect a 5:4 stock split that has occurred since my initial investment.

The duplicate EOY Value entries at the end of each year (one negative, one positive) do not affect the cash flow, and can be thought of as boundary markers, allowing me to make the individual yearly return, and the annualized total return calculations.

 

 

RPM had some issues with asbestos litigation in 1999 & 2000 which led to approximately a 50% price decline.  However, I stayed with them, and the resulting OCPs I made during that time have turned out to really boost my returns.

You’ll notice there has been only one withdrawal over the 21+ years I’ve had RPM.  This came in 2016 when I had to sell the fractional shares as a result of closing my DRiP account and transferring the shares to my brokerage account (I was only allowed to transfer whole shares).

Otherwise, it’s been only small OCPs here and there… usually $50 or $100, and once with a contribution of $250.  My last OCP was way back in 2003.  Thus, the reinvested dividends have been doing the work in the last decade plus.

The net investment into RPM over the years has been $1,586.81.  This is not my cost basis though, as this net investment does not include reinvested dividends.

Meanwhile, the current value is $11,670.90.

The annualized total return ends up being 10.79%, covering my initial purchase on 4/10/1996, all the way to 10/9/2017.

As with PG, my investment timeframe for RPM includes two significant bear markets.

 

Summary

Considering the market has been up strongly in 2017, RPM’s price performance this year has been disappointing.  However, I can’t argue with the long-term track record.  I’ll continue to monitor things with RPM, but I’m confident this recent performance is just a blip on the radar.

My 10.79% annualized return for RPM easily meets my desired target return of 9% to 11%.

This performance also exceeds the 9.41% I reported for my Procter & Gamble position in my last performance check.

This is the second of at least 5 performance checks that I’ll be doing in the next few months.  Hopefully, you find these interesting.  Let me know if you have any questions about what you see in the spreadsheet.

Do you have similar performance checks for stocks in your portfolio?  If so, please share some of your annualized return numbers!  Let me know what criteria you have for acceptable performance.