Yahoo Finance 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. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
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 22.03% since the start of the year. The consumer products maker is currently shelling out a dividend of $0.5 per share, with a dividend yield of 2.06%. This compares to the Soap and Cleaning Materials industry's yield of 2.41% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $2 is up 4.7% from last year. Colgate-Palmolive has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.79%. 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 57%. This means it paid out 57% of its trailing 12-month EPS as dividend.
CL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $3.53 per share, which represents a year-over-year growth rate of 9.29%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CL is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Colgate-Palmolive Company (CL) : Free Stock Analysis Report
