Dividend Aristocrat Clorox Rewards Shareholders with 10% Dividend Hike (CLX)
By: Ned Piplovic,
The Clorox Company’s (NYSE: CLX) maintains its dividend aristocrat status with a 10.4% dividend boost for the next round of dividend distributions.
This upcoming quarterly dividend boost will extend Clorox’s streak of annual dividend hikes to 42 consecutive years. Since this streak is more than the required minimum of 25 years, Clorox belongs to a small group of only 57 companies with the Dividend Aristocrats designation. While the 25 consecutive years of dividend boosts is the main requirement, Clorox also meets the secondary eligibility prerequisites for a Dividend Aristocrat label. In addition to the required current streak of consecutive annual dividend hikes, every Dividend Aristocrat must also be a component of the S&P 500 and have a market capitalization of at least $3 billion.
Beside the long record of rising dividend income, the share price also rewarded its shareholders with long-term capital gains. The share price advanced nearly three-fold just over the past decade since the 2008 financial crisis and combined with the rising dividend income distributions for total return of nearly 250%.
While experiencing some fluctuations over the past 18 months and a pullback from its all-time high in late 2018, the share price still closely follows its long term uptrend. The current pullback might be a good opportunity to take a new or expand an existing position in the company stock at discounted prices for investors who believe Clorox’s fundamentals are strong and that the share price has the strength to challenge its recent highs soon.
The Clorox Company (NYSE:CLX)
Founded in 1913 and headquartered in Oakland, California, The Clorox Company manufactures and markets consumer and professional products. The company operates through four segments: Cleaning, Household, Lifestyle and International. In its product lineup, the company offers laundry additives, home care products, stain fighters and color boosters under the Clorox, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S. and Tilex brands, as well as naturally derived products under the brand name Green Works. In addition to the above products, Clorox makes charcoal products under the Kingsford and Match Light brands. Other brand names in the Clorox portfolio include Glad, Fresh Step and Scoop Away. Additionally, the company owns Hidden Valley, KC Masterpiece, Kingsford and Soy Vay brands used for dressings and sauces, the Brite water-filtration and filters brand and the Burt’s Bees brand of natural personal care products.
Clorox started paying dividends in 1968 and has boosted its annual dividend payout for the past 42 consecutive years. Just over the past 20 years, the Clorox Company enhanced its total annual payout amount nearly 460%. This advancement pace corresponds to an average growth rate of 9% every year since the current dividend streak began in 1976.
The current 10.4% hike will raise the company’s quarterly dividend payout amount from $0.96 in the previous quarter to a $1.06 distribution for the next dividend distribution. This new quarterly distribution amount converts to a $4.24 annualized amount and a 2.7% forward dividend yield, which is 5.7% higher than the company’s own dividend yield average of 2.56% over the past five years. Additionally, the current boost rate is higher than the 6.25% and the 7.66% average annual growth rates over the past five and three years, respectively.
In addition to outperforming its own yield average over the past five years, Clorox’s current yield also outperformed the current 1.92% simple average yield of the entire Consumer goods sector by nearly 41%. Furthermore, as the company with the highest yield in the Cleaning Products industry segment, Clorox’s current yield is 176% above the segment’s current average yield of 0.98%. Moreover, the Clorox’s current 2.7% yield is even 83% higher than the 1.48% simple average yield of the segment’s only dividend-paying companies.
While not the highest on the market, Clorox‘s industry-topping dividend yield and the streak of consecutive annual dividend hikes worthy the Dividend Aristocrat designation are very attractive to income-seeking investors. Therefore, investors interested in adding the Clorox stock to their portfolio and taking advantage of the upcoming quarterly dividend payout should act before the company’s next ex-dividend date on July 30, 2019. The company will pay the next round of dividend distributions just a little more than two weeks following the ex-dividend date, on the August 16, 2019, pay date.
Despite trading somewhat flatly in 2019, the share price still delivered a double-digit-percentage gain over the past 12 months. Following a decline of nearly 25% between mid-December 2017 and early April 2018, the share price hit its 52-week low of $124.55 on June 7, 2018, reversed direction and embarked on steep recovery trend. Riding that uptrend into the trailing one-year period, the share price gained one third of its value from the beginning of the trailing 12 months in early June until reaching a new peak in late November 2018. However, after trading above $160 for a full month and hitting its new all-time high of $166.36 on November 26, the share price dropped to approximately $155 by the third week of December and has been trading generally in the $150 to $160 range since then.
At the end of trading on June 7, 2019, the share price closed at $156.63, which was 5.8% lower than the all-time peak from November 2018. However, the June 7 closing price was 25.8% higher than the 52-week low from June 2018, as well as nearly 75% higher than it was five years ago.
The combination of strong asset appreciation and a robust long-term dividend growth by this Dividend Aristocrat company has delivered strong total returns to Clorox’s shareholders. The total return over the last tree years was nearly 32%. The timing of the share price pullback from early 2018 made the total return of more than 34% over the past year outperform the three-year return. However, the shareholders nearly doubled their investment over the past five years with a total return of more than 97% over that period.
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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.