Colgate-Palmolive (CL) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Colgate-Palmolive in Focus
Colgate-Palmolive (CL) is headquartered in New York, and is in the Consumer Staples sector. The stock has seen a price change of 10.97% since the start of the year. The consumer products maker is paying out a dividend of $0.48 per share at the moment, with a dividend yield of 2.17% compared to the Soap and Cleaning Materials industry's yield of 2.35% and the S&P 500's yield of 1.59%.
Looking at dividend growth, the company's current annualized dividend of $1.92 is up 0.5% from last year. In the past five-year period, Colgate-Palmolive has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.88%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Colgate-Palmolive's current payout ratio is 59%. This means it paid out 59% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CL expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $3.48 per share, which represents a year-over-year growth rate of 7.74%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that CL is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Colgate-Palmolive Company (CL) : Free Stock Analysis Report
