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This is Why Colgate-Palmolive (CL) is a Great Dividend Stock
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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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in New York, Colgate-Palmolive (CL - Free Report) is a Consumer Staples stock that has seen a price change of -8.78% so far this year. Currently paying a dividend of $0.44 per share, the company has a dividend yield of 2.26%. In comparison, the Soap and Cleaning Materials industry's yield is 1.96%, while the S&P 500's yield is 1.48%.
In terms of dividend growth, the company's current annualized dividend of $1.76 is up 0.6% 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 3.22%. 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 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
CL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.30 per share, with earnings expected to increase 7.84% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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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This is Why Colgate-Palmolive (CL) is a Great Dividend Stock
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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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
Headquartered in New York, Colgate-Palmolive (CL - Free Report) is a Consumer Staples stock that has seen a price change of -8.78% so far this year. Currently paying a dividend of $0.44 per share, the company has a dividend yield of 2.26%. In comparison, the Soap and Cleaning Materials industry's yield is 1.96%, while the S&P 500's yield is 1.48%.
In terms of dividend growth, the company's current annualized dividend of $1.76 is up 0.6% 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 3.22%. 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 58%, meaning it paid out 58% of its trailing 12-month EPS as dividend.
CL is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2021 is $3.30 per share, with earnings expected to increase 7.84% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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).