Colgate-Palmolive Co's Dividend Analysis
Assessing the Sustainability of Colgate-Palmolive's Dividend Payments
Colgate-Palmolive Co (NYSE:CL) recently announced a dividend of $0.48 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-19. 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 Colgate-Palmolive Co's dividend performance and assess its sustainability.
What Does Colgate-Palmolive Co Do?
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Since its founding in 1806, Colgate-Palmolive has grown to become a leading global consumer product company. In addition to its namesake oral care line, the firm manufactures shampoos, shower gels, deodorants, and home care products that are sold in over 200 countries. International accounts for about 70% of its total sales base, including approximately 45% from emerging regions. It also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers.
A Glimpse at Colgate-Palmolive Co's Dividend History
Colgate-Palmolive Co has maintained a consistent dividend payment record since 1964. Dividends are currently distributed on a quarterly basis. Colgate-Palmolive Co has increased its dividend each year since 1964. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 60 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Colgate-Palmolive Co's Dividend Yield and Growth
As of today, Colgate-Palmolive Co currently has a 12-month trailing dividend yield of 2.36% and a 12-month forward dividend yield of 2.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Colgate-Palmolive Co's annual dividend growth rate was 2.80%. Extended to a five-year horizon, this rate increased to 3.00% per year. And over the past decade, Colgate-Palmolive Co's annual dividends per share growth rate stands at 3.90%.
Based on Colgate-Palmolive Co's dividend yield and five-year growth rate, the 5-year yield on cost of Colgate-Palmolive Co stock as of today is approximately 2.74%.
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, Colgate-Palmolive Co's dividend payout ratio is 0.99, which may suggest that the company's dividend may not be sustainable.
Colgate-Palmolive Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Colgate-Palmolive 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. Colgate-Palmolive 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 Colgate-Palmolive Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Colgate-Palmolive Co's revenue has increased by approximately 5.50% per year on average, a rate that underperforms than approximately 54.88% 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, Colgate-Palmolive Co's earnings increased by approximately 1.60% per year on average, a rate that underperforms than approximately 57.48% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.40%, which underperforms than approximately 60.49% of global competitors.
Next Steps
While Colgate-Palmolive Co's dividend history is commendable, with over half a century of consistent increases, the current payout ratio raises questions about the long-term sustainability of these payments. However, the company's strong profitability and growth rank offer some reassurance. Investors should weigh these factors and consider Colgate-Palmolive Co's overall financial health and market position when evaluating the stock for dividend investing. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
