Clorox Expands Dividend Rate

The Clorox Company ( CLX - Analyst Report ) , known for its shareholder-friendly moves, recently raised its quarterly dividend by 11% or 7 cents to 71 cents per share. Earlier, the company used to pay 64 cents per share.

The new dividend will be paid on Aug 9, 2013 to shareholders of record as of Jul 24, 2013. The hike in dividend now brings the company’s annualized dividend rate to $2.84 per share. Based on the current stock price, the increased dividend, results in yield of 3.3%.

Previously, on May 14, 2012, Clorox raised its dividend to 64 cents from 60 cents per share, indicating an increase of 6.7%.

Clorox has been enhancing shareholder return from time to time. The company has a track record of consistently raising annual dividends every year since 1977. Taking a decade-long view, the company has successfully increased its dividend by nearly 69% from 22 cents paid in Feb 2003, to 71 cents announced recently.

We believe that Clorox’s consistent dividend payments and increments reflect the growth potential of the company’s earnings as well as its cash flow generation capabilities.

Though Clorox’s third-quarter 2013 results were slightly disappointing when compared with the prior-year period and the Zacks Estimate, the company continued to maintain a solid balance sheet alongside improved cash flows. This Zacks Rank #3 (Hold) company’s third-quarter earnings came in at $1.00 per share compared with $1.04 in the comparable period last year and the Zacks Consensus Estimate of $1.06 per share.

On the other hand, Clorox ended the quarter with cash and cash equivalents of $423 million. During the first 9 months of fiscal 2013, the company generated $486 million net cash from operations, marking an increase of $153 million from the year-ago period.

Looking ahead, the company lowered its annual sales growth guidance for fiscal 2013 to 3%–4%, against the company’s previous guidance range of 3%–5%, on account of reduced charcoal sales due to adverse weather conditions. However, Clorox continues to anticipate annual earnings of $4.25–$4.35 per share in fiscal 2013.

Additionally, the company, which competes with Church & Dwight Company Inc. ( CHD - Snapshot Report ) , Colgate-Palmolive Company ( CL - Analyst Report ) and Proctor & Gamble Company ( PG - Analyst Report ) , provided its fiscal 2014 guidance, projecting sales growth in the range of 2%–4%. The company anticipates fiscal 2014 earnings per share to be in the range of $4.55– $4.70.