The Clorox Company manufactures and markets a range of consumer products. The company is also member of the S&P Dividend Aristocrats index. This diversified maker of household cleaning, grocery and specialty food products is also a top manufacturer of natural personal care products.
Clorox has paid uninterrupted dividends on its common stock since it was spun out of Procter and Gamble (PG) in 1968 and increased payments to common shareholders every year for 31 years.
From the end of 1998 up until December 2008 this dividend growth stock has delivered an annual average total return of 1.70% to its shareholders. While the stock has largely remained flat for the majority of the past most of the returns came from reinvested dividends.
At the same time company has managed to deliver an impressive 13.60% average annual increase in its EPS since 1999. Analysts are expecting an increase in 2009 earnings per share to $3.80 and $4.15 by 2010.
The Return on Assets increased to 11% in 2008 from 6% in 1999. I used return on assets, since the stockholders equity portion of the balance sheet was negative after in 2004 Clorox exchanged its ownership in a subsidiary for approximately 29% of the company’s outstanding shares at the time of this transaction. In addition to that the company spent over 1.65 billion in share buybacks in 2007 and 2008.
Annual dividends have increased by an average of 8.60% annually since 1999, which is lower than the growth in EPS. Clorox has an ever-evolving dividend payment policy, which doesn’t stop the company from raising the annual distributions for 31 years in a row. There have been times such as in 2007 when dividend were raised twice while there are times such as 2003-2004 and 2000-2002 when dividends are not being raised for 6 to 9 quarters.
A 9 % growth in dividends translates into the dividend payment doubling every eight years. If we look at historical data, going as far back as 1983, The Clorox Company has actually managed to double its dividend payment every six years on average. The dividend is very well covered at the moment and is safe.
The dividend payout ratio remained above 50% until 2002. Since then the dividend payout ratio has consistently remained below 50%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Clorox is trading at a P/E of 14 and yields 3.50%. I believe that the company is attractively valued at current levels and would consider adding to my position in the stock.
In comparison Procter & Gamble (PG) trades at a P/E multiple of 12 and yields 3.40%, Kimberly-Clark (KMB) trades at a P/E multiple of 13 and yields 4.70%, while Colgate Palmolive (CL) trades at a P/E multiple 18 while yielding 2.70%.
Full Disclosure: Long CLX, PG, and KMB
- Procter & Gamble (PG) Dividend Stock Analysis
- Why do I like Dividend Aristocrats?
- The Rule of 72
- Johnson & Johnson (JNJ) Dividend Stock Analysis
S&P 500® Dividend Aristocrats measure the performance S&P 500 companies that have increased dividends every year for the last 25 con...
This is a guest post written by Retire Before Dad. He writes about dividend investing, personal finance and travel at the Retire Before Dad...
This is a guest post from Roadmap2Retire blog , which documents the retirement journey of a dividend growth investor from Canada. I am an ...
Investing in dividend growth stocks has been a winning investment over the past 8 – 10 years. I myself have invested in dividend growth stoc...
I have shared with you early in the year, that I am essentially living off dividends and side income in 2016. I am saving my other income i...
Last week I shared with you the list of 2016 Dividend Aristocrats and its performance over the past decade . In addition, I isolated twenty...
As an investor, I have always believed in diversification . I would rather err on the side of caution, rather than swing for the fences. It ...
The Procter & Gamble Company (PG), together with its subsidiaries, manufactures and sells branded consumer packaged products worldwide....
Unilever PLC (UL) operates in the fast-moving consumer goods market in the Africa, Americas, Asia Pacific, Europe, and Middle East. The comp...
I believe that diversification is the only free lunch in investing. However, different investors have different takes on the topic of diver...