I own both PG and CL, and like the above, always t...

2011-04-09T05:13:10.851-07:00

I own both PG and CL, and like the above, always tried to determine which is the best one. All I can say is that financials ratios aside, PG has a market cap that is almost 8 times that of CL and no matter how you look at it, it is much more difficult to grow that base. At a market cap of 30B, CL has probably more possibilities for growth and I think the aforementioned debt level is easily manageable for a company with such predictable earning power.

I very much enjoy your site, and have often referr...

2011-02-03T13:31:17.916-08:00

I very much enjoy your site, and have often referred to it. One thing I would change, in fact the most important thing, is the following:

In all of your analyses, you do yourself and your readers a great disservice by focusing only on the headline ROE number. If you break out ROE, the equation is as follows:

ROE = (one year's earnings / one year's sales) x (one year's sales / assets) x (assets / shareholder equity)

That last item is one way of representing leverage, and it means a company can juice its ROE using leverage. For example, a company can take on more leverage in an otherwise down year to maintain a steady ROE.

In the case of CL, yes it's a great company, but it has a debt to equity ratio of 1.3. That is as compared to PG's debt to equity ratio of 0.3. CL's debt to equity ratio, its leverage, is over four times as high!!! Is it any wonder that CL's ROE is much higher than PGs? No. Does this make CL a better company than PG. No. By focusing on headline ROE one misses that.

Comments on Dividend Growth Investor: Colgate-Palmolive (CL) Dividend Stock Analysis

I own both PG and CL, and like the above, always t...

I very much enjoy your site, and have often referr...