Understanding the Dividend Performance and Sustainability of Colgate-Palmolive Co
Colgate-Palmolive Co(CL, Financial) recently announced a dividend of $0.48 per share, payable on 2023-11-15, with the ex-dividend date set for 2023-10-20. 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 delve into Colgate-Palmolive Co's dividend performance and assess its sustainability.
About Colgate-Palmolive Co
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. It also owns specialty pet food maker Hill's, which sells its products through veterinarians and specialty pet retailers. International sales account for about 70% of its total sales base, including approximately 45% from emerging regions.
A Glimpse at Colgate-Palmolive Co's Dividend History
Colgate-Palmolive Co has maintained a consistent dividend payment record since 1964, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1964, earning it the title of a dividend king, an honor given to companies that have increased their dividend each year for at least the past 59 years.
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 2.63% and a 12-month forward dividend yield of 2.65%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 2.80%. When extended to a five-year horizon, this rate increases to 3.00% per year. Over the past decade, the company's annual dividends per share growth rate stands at 3.90%.
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 2023-06-30, Colgate-Palmolive Co's dividend payout ratio is 1.06, which may suggest that the company's dividend may not be sustainable.
Colgate-Palmolive Co's profitability rank of 8 out of 10 as of 2023-06-30, suggests 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. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, the company's 3-year EPS growth rate and 5-year EBITDA growth rate underperform compared to global competitors.
Conclusion
Colgate-Palmolive Co has a long history of consistent dividend payments and has shown steady growth in its dividend yield. However, its high payout ratio and underperforming growth rates compared to global competitors raise questions about the sustainability of its dividends in the long run. Investors should closely monitor these factors when considering Colgate-Palmolive Co as a potential investment.
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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.
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