Clorox Co's Dividend Analysis
Understanding the Dividend Dynamics of Clorox Co
Clorox Co (NYSE:CLX) recently announced a dividend of $1.2 per share, payable on 2024-02-09, with the ex-dividend date set for 2024-01-23. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Clorox Co's dividend performance and assess its sustainability.
What Does Clorox Co Do?
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Since its inception more than 100 years ago, Clorox has grown to play in a variety of categories across the consumer products space, including cleaning supplies, laundry care, trash bags, cat litter, charcoal, food dressings, water-filtration products, and natural personal-care products. Beyond its namesake brand, the firm's portfolio includes Liquid-Plumr, Pine-Sol, S.O.S, Tilex, Kingsford, Fresh Step, Glad, Hidden Valley, KC Masterpiece, Brita, and Burt's Bees. Just shy of 85% of Clorox's sales stem from its home turf.
A Glimpse at Clorox Co's Dividend History
Clorox Co has maintained a consistent dividend payment record since 1978. Dividends are currently distributed on a quarterly basis. Clorox Co has increased its dividend each year since 1978. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 46 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Clorox Co's Dividend Yield and Growth
As of today, Clorox Co currently has a 12-month trailing dividend yield of 3.35% and a 12-month forward dividend yield of 3.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Clorox Co's annual dividend growth rate was 3.60%. Extended to a five-year horizon, this rate increased to 6.30% per year. And over the past decade, Clorox Co's annual dividends per share growth rate stands at 6.60%.
Based on Clorox Co's dividend yield and five-year growth rate, the 5-year yield on cost of Clorox Co stock as of today is approximately 4.55%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Clorox Co's dividend payout ratio is 6.87, which may suggest that the company's dividend may not be sustainable.
Clorox Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Clorox Co's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Clorox Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Clorox Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Clorox Co's revenue has increased by approximately 4.20% per year on average, a rate that underperforms approximately 59.23% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Clorox Co's earnings increased by approximately -11.30% per year on average, a rate that underperforms approximately 71.72% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -7.20%, which underperforms approximately 77.9% of global competitors, raises concerns about its future earnings potential.
Engaging Conclusion: Evaluating Clorox Co's Dividend Prospects
In conclusion, while Clorox Co boasts a commendable history of dividend payments and growth, its current payout ratio and mixed growth metrics may raise questions about the long-term sustainability of its dividends. Investors should consider both the company's strong profitability rank and the challenges it faces in revenue and earnings growth. With these insights, value investors can make more informed decisions about Clorox Co's place in their portfolios.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
