Colgate-Palmolive Offers One-Year Double-Digit Percentage Total Return, 55 Consecutive Annual Dividend Hikes (CL)
By: Ned Piplovic,
In addition to its extraordinary streak of annual dividend hikes, the Colgate-Palmolive Company (NYSE:CL) currently offers investors a share price uptrend that combined with the rising dividend distributions for a double-digit-percentage total return over the trailing year.
Colgate-Palmolive’s share price experienced some volatility over the past two years that interrupted the company’s steady uptrend, which lasted nearly a decade after a substantial pullback in the aftermath of the 2008 financial crisis. However, the share price recovery in 2019 has given new investors a good reason to consider taking a long position in the Colgate-Palmolive stock.
While low compared to dividend yields of equities in high-yield sectors — like the Financial sector — Colgate-Palmolive’s current dividend yield outperforms yield averages of its peers in the Consumer Goods sector. After dropping more than 20% in less than a year from its all-time high in January 2018, the recent share price recovery complemented the long-term rising dividend income distributions to reward shareholders with a double-digit-percentage total return over the past 12 months.
Notwithstanding the current average yield level, Colgate-Palmolive’s record of 55 consecutive annual boosts is longer than most other dividend-paying equities. As a component of the S&P 500 Index with a market capitalization of more than $3 billion, Colgate-Palmolive’s current streak of more than 24 consecutive annual dividend hikes makes this stock a Dividend Aristocrat. Even in an exclusive group of just 57 companies that qualify for the designation, only nine have longer streaks of consecutive annual dividend hikes. Moreover, because Colgate-Palmolive’s current dividend increase record exceeds 50 consecutive years, the company also shares the even more exclusive Dividend King label with only 12 other S&P 500 companies.
While the share price has recovered already nearly three-quarters of its 2018 losses, the stock still has a little room on the upside before it reached the analysts’ current $72.56 average target price. Additionally, the short-term and long-term moving averages indicates that the current uptrend might have enough steam to continue rising into the near future. The 2018 share price decline dropped the 50-day moving average below its 200-day counterpart, where it remained throughout the second half 2018 and the first-quarter 2019.
However, less than 90 days into the 2019 share price recovery, the 50-day moving average broke back above the 200-day moving average in a bullish manner and continued to advance higher. Just a little more than three months after this crossover on March 18, 2019, the 50-day average has risen to nearly 8.5% above its 200-day counterpart by the beginning of July. Furthermore, the share price has been trading above both moving averages since the end of January. During that period the share price closed below the 50-day moving average only twice. Investors interested in taking advantage of the current share price uptrend should conduct their own due diligence to decide if the Colgate-Palmolive stock is a good fit with their overall portfolio strategy. Those who decide to invest in Colgate-Palmolive — or expand their existing position in the company’s stock — should act before the next ex-dividend date on July 17, 2019. All investors who claim stock ownership before that ex-dividend date will be eligible to receive the next round of dividend distributions on the August 15, 2019, pay date.
The Colgate-Palmolive Company (NYSE:CL)
Founded in 1806 and headquartered in New York City, the Colgate-Palmolive Company manufactures and sells consumer products worldwide. The company operates through three business segments, Oral, Personal and Home Care and Pet Nutrition. The company offers oral care, personal care and home care products. Additionally, the company’s Pet Nutrition segment provides pet products for everyday nutritional needs, a range of therapeutic products to manage disease conditions and various products with natural ingredients. The business unit also markets and sells its pet nutrition products for dogs and cats through pet supply retailers and veterinarians. The company markets and distributes its product under many wel l-known, household brands and trademarks, which include Colgate, Palmolive, Speed Stick, Lady Speed Stick, Softsoap, Irish Spring, Protex, Tom’s of Maine, Sanex, Ajax, Soupline and Suavitel, as well as Hill’s Science Diet, Hill’s Prescription Diet and Hill’s Ideal Balance.
The company entered the trailing 12-month period on the declining trend that began in January 2018. After declining more than 10% during the first half of the trailing 12 months, the share price reached its 52-week low of $58.04 on December 24, 2018. However, after the downward pressure from the late-2018 overall market correction lessened, the share price reversed direction and embarked on a steep recovery trend.
Over the subsequent six months, the share price rose 27.5% before reaching its 52-week high of $73.99 on June 7, 2019. Since peaking in early-June, the share price retreated 2.6% and closed on July 2, 2019, at $72.08. This closing price marked an 11.6% gain over the past 12 months, as well as a gain of more than 24% since the 52-week low in late-December 2018. The 2018 decline brought the current share price is in line with its level from three years ago and limited the advancement over the past years to just 4%.
While its share price encountered some headwinds in 2018, Colgate-Palmolive continued its steady streak of annual dividend hikes uninterrupted. The company paid its first quarterly dividend in 1895. The current streak of consecutive annual dividend hikes began in 1963. Just over the past two decades, Colgate-Palmolive enhanced its total annual dividend payout nearly 450%, which is equivalent to an average annual growth rate of 8.9%.
The company’s current $0.43 quarterly dividend payout is 2.4% higher than the $0.42 distribution from the same period last year. This current distribution amount corresponds to a $1.72 annualized distribution and currently yields 2.4%, which is 6.1% higher than the company’s own 2.22% five-year dividend yield average. Furthermore, Colgate-Palmolive’s current yield is nearly 30% above the 1.86% average yield of the overall Consumer Goods sector, as well as 10% higher than the 2.17% average yield of all the companies in the Personal Products market segment.
The 2018 share price pullback held the combined total return over the past three years to just 3%. The 4% share price gain since mid-2014 accounted for nearly one quarter of the 17.4% total return over the five-year period. However, the current share price recovery contributed more than 80% of the 14.5% total return over the past 12 months.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.