Dividend-Paying Cleaning Stocks to Buy Now

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3 dividend growth stocks

Dividend-paying cleaning stocks to buy now amid the COVID-19 pandemic offer investors an opportunity to profit from products and services focused on tapping into a “long-lasting and transformative” emphasis on hygiene, according to a recent research report from Barclays.

The dividend-paying cleaning stocks to buy now amid the COVID-19 pandemic should benefit from heightened sanitary expectations by consumers and employees. Cleanliness may be viewed as less critical in the past but not anymore during nearly a year of soaring COVID-19 cases and deaths.

Growing demand for disinfecting wipes, for example, has forced many stores to limit consumers from purchasing more than two canisters at a time, if they are available at all, according to Barclays. Past assumptions that commercial locations were properly sanitized and safe are not as common, and Barclays predicts that consumers will need increased visible assurances of cleanliness even after the pandemic ends.

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Dividend-Paying Cleaning Stocks to Buy Now Amid COVID-19 Pandemic Include Clorox, Pension Chairman Says

The dividend-paying cleaning stocks to buy during the COVID-19 pandemic feature Clorox Co. (NYSE:CLX), a global manufacturer and marketer of consumer and professional cleaning and other products, said Bob Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. Carlson, who also leads the Retirement Watch investment newsletter, identified Oakland, California-based Clorox as his “longtime favorite” in this category.

“It’s a well-managed, focused company that’s a solid brand name in both the household and commercial sectors,” Carlson said.

The stock also is selling well below its August high, Carlson continued. Unlike most other stocks in this sector, Clorox offers a decent dividend yield of 2.19% and has a history of boosting its payout, he added.

Clorox’s price-to-earnings (P/E) ratio of 22.53 and its share price has pulled back 1.64% in the past three months, after zooming 34.61% since the start of the year and 37.71% in the past year. Its sector notched a gain of 2.32% in the last three months, 13.08% since beginning of 2020 and 14.04% in the last 12 months.

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Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an interview before social distancing became the norm after the COVID-19 outbreak.

Clorox Chosen by Barclays as One of the Dividend-Paying Cleaning Stocks to Buy Now

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Barclays cited Clorox’s many business partnerships since the start of the pandemic that feature Uber Technologies Inc. (NYSE:UBER), United Airlines Holdings (NASDAQ:UAL), AMC Entertainment (NYSE:AMC), Cleveland Clinic and most recently Enterprise Rent-A-Car. Clorox “wisely” is beefing up its institutional business on the credentials of its known and trusted brands, Barclays added.

Despite consumers preferring the use of familiar brands in public spaces, a Barclays survey found that cleaning frequency and visible cleaning activity, regardless of brand, are most important. As Clorox builds this business, it is taking on both advisory and supplier business-to-business (B2B) partnerships, with the latter likely to produce more revenue, Barclays concluded.

Clorox’s Professional Products Division (PPD) is one of the more compelling growth opportunities available to the company in the future, according to Barclays. Institutional disinfecting and cleaning markets served by Clorox cater to commercial rather than residential customers that operate offices, factories, restaurants, hotels and other “away-from-home” spaces, Barclays added.

Chart courtesy of www.stockcharts.com

Ecolab Is Another of the Dividend-Paying Cleaning Stocks to Buy Now During Pandemic

Services companies like Ecolab Inc. (NYSE:ECL), of St. Paul, Minnesota, have a history of providing products for its business-to-business customers, but the average consumer is not necessarily aware of the company’s expertise, Barclays opined. Ecolab, which offers a 0.87% dividend yield, develops and offers services, technology and systems that specialize in water treatment, purification, cleaning and hygiene in an array of applications.

“As the #1 institutional cleaning player with leading scale, innovation and service capabilities, we view Ecolab as a clear long-term winner from the secular trend towards enhanced focus on cleaning,” Barclays wrote.

Despite Ecolab’s near-term volumes suffering from government-imposed business shutdowns, shareholders should be willing to look beyond near-term headwinds, since the company is positioned to come out of the COVID-19 crisis stronger than ever, Barclays concluded. Reasons include its core water and sanitization solutions gaining rising relevance across sectors and geographies; its superior scale giving it a competitive edge; its blue-chip, multi-national customers becoming well positioned to survive and grow market share in the coming years; and its 27,000 field service force and best-in-class innovation are “unmatched,” according to Barclays.

Ecolab’s share price has moved in relatively close correlation with its sector by jumping 6855% in the past three months, 15.29% since the start of the year and 19.05% during the past 12 months. In comparison, its sector rose 9.71% in the last three months, 18.11% for the year to date and 19.97% in the last year.

Chart courtesy of www.stockcharts.com

Cintas Ranks Among Dividend-Paying Cleaning Stocks to Buy Now Amid COVID-19 Pandemic

Cintas Corp. (NASDAQ:CTAS), known mainly as a uniform rental company, has done a “nice job” in the last decade by diversifying into hygiene services to account for 10% of its total revenues, according to Barclays. The company’s hygiene services typically involve weekly or biweekly visits to customer locations to provide paper towels, toilet paper, air fresheners, etc., Barclays added.

The company sells all its hygiene and facility services products directly from its trucks, while offering a wide variety of styles and colors to meet customer needs, Barclays wrote. Cintas helps its customers outsource a non-core bu key function of cleaning and sanitation services.

Hygiene and facility services are a multi-year growth driver for Cintas, letting the company entice new customers in the form of bars, restaurants and white-collar offices, Barclays reported. Customer concerns about COVID-19 have let Cintas provide needed sanitizers and personal protection equipment (PPE) that its customers and competitors could not supply during the heart of the pandemic, Barclays added.

Dividend-Paying Cleaning Stocks to Buy Now During COVID-19 Still Can Grow the Niche 

Cintas signed up a California university for a multi-year hand sanitizer service agreement and provided another university with more than 1 million face masks. Cintas has a sales team assigned to serve such customers, offering cleaning and sanitizing products still in demand amid a COVID-19 world.

As for cleaning and sanitation in hospitals, health care currently accounts for 7% of total revenues of roughly $500 million at Cintas, with management eyeing it to become its first vertical market to produce 10%+ of its overall sales mix. With health care accounting for 17% of gross domestic product (GDP), Barclays forecasts it to become a $1 billion business over time.

“In our view, Cintas appears uniquely positioned to gain significant share in the space,” Barclays concluded.

Chart courtesy of www.stockcharts.com

Procter & Gamble Is One of the Dividend-Paying Cleaning Stocks to Buy Now But Not a Pure Play

P&G Professional generates roughly $1.2 billion in revenue, accounting for 15% of the Fabric & Home Care division and about 2% of total company sales. The P&G Professional business unit is the fifth-largest provider in the fragmented institutional cleaning market, Barclays found.

The Procter & Gamble (NYSE:PG) business has developed in the past decade from its heritage in the food service marketplace, where it also marketed its then-owned Folgers & Millstone coffee brands. Since then, the business has been aimed at cleaning focused on hospitality and food service customers, with a presence in educational institutes, retail and non-acute health care customers.

Chart courtesy of www.stockcharts.com

Barclays wrote that P&G has been gaining share in the overall industry segments in which it competes. Importantly, P&G Professional has long operated as a standalone business in an end-to-end manner with dedicated sales and research and development (R&D) resources.

P&G Professional Unit Is One of the Dividend-Paying Cleaning Stocks to Buy Now in the Pandemic

The P&G business geographically spans North America and Europe, though the European business is in earlier stages of development but showing strong growth and returns from its investments in the past 18 months since the division obtained new management. The strategy of P&G Professional has evolved significantly in the last decade and targets core competencies in cleaning through discrete formulations of brands such as Dawn, Tide and, most recently, Microban 24, rather than its historical focus on food service, Barclays noted.

P&G’s products tend to be priced at a premium but offer superior performance and net cost savings, Barclays wrote. Examples in the Professional division include Dawn Pots & Pans, which claims 4x cleaning power and savings on water usage, and Tide Cold Water Pro, which seeks savings on energy expenses and reduced linen replacement costs.

Overall, Cincinnati-based Procter & Gamble is positioned to gain market share, but it is not a pure play investment on the trend toward enhanced hygiene. Investors who like its 2.29% dividend yield and its other businesses may find its shares worth buying. But the stock’s P/E ratio of 25.91 is not inexpensive and should be compared by investors with other potential investments. The company’s share price added 1.11% in the past three months but gained 13.18% since the start of 2020 and 12.81% in the past year, compared to its sector’s increases of 2.32% in the past three months, 13.08% year to date and 14.04% in the last 12 months.

Dividend-Paying Cleaning Stocks to Buy Now Feature Reckitt Benckiser as It Enters the Professional Market

Reckitt Benckiser Group PLC (OTCMKTS:RBGPF), of the United Kingdom, historically only has served the retail hygiene market, but has entered the professional cleaning market in recent months and plans further expansion. Barclays estimates the company’s flagship Dettol and Lysol cleaning and hygiene brands will gain a bigger share of its sales in 2020. In the company’s first-half 2020 results released on July 28, it disclosed plans to participate in the professional cleaning category with these brands.

With a dividend yield of 2.48% and a P/E ratio of 21.7, Reckett Benckiser Group is interested in participating in the front of house segment of the professional cleaning market where customers can see the effort. This makes sense, Barclays concluded, since the company does not have the scale to compete with market leaders across the whole professional cleaning segment. Specifically, the company lacks the required sales force or logistical capabilities, Barclays added.

Historically, front of house has been a very small market, Barclays assessed. Most cleaning takes place in the back of house, away from consumers, but Barclays wrote that a new front of house market has been created by COVID-19, in which consumers and employees want confidence and reassurance.

“This is where RB aims to compete, and its Dettol and Lysol brands — along with other leading retail cleaning brands — offer that visible reassurance to consumers,” Barclays concluded.

Money Manager Kramer Weighs in about Dividend-Paying Cleaning Stocks to Consider Buying Now

Hilary Kramer, host of a national radio program, “Millionaire Maker,” and head of the GameChangers and Value Authority advisory services, said she has  been watching ABM Industries Inc. (NYSE:ABM), a New York-based facility management provider in the United States that may be the “ultimate cleaning stock.” The company has a division that does janitorial work but, at 20X next year’s earnings per share (EPS) estimates, she expressed concern about its valuation and is not recommending the stock.

She previously recommended MSC Industrial Direct Co. Inc. (NYSE:MSC) in her Value Authority trading service. The company sells janitorial supplies that helped to support its earnings in 2020 but Kramer questioned whether its stock price would rise enough to justify its current valuation.

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day TraderTurbo Trader, High Octane Trader and Inner Circle.

Although the COVID-19 pandemic has created opportunities for companies focused on hygiene and cleaning, the virus has caused economic fallout and huge job cuts. A recent surge in cases included President Trump, who was hospitalized between Friday, Oct. 2, and Monday, Oct. 5. The overall weekly hospitalization rate is at its highest point in the pandemic, with steep increases in individuals aged 65 years and older, according to the Centers for Disease Control and Prevention (CDC). The number of patients in U.S. hospitals with Covid-19 hit a record high for the 12th day in a row on Thursday, Dec. 17, as the U.S. Food and Drug Administration announced plans to issue emergency use authorization for a second coronavirus vaccine. As of that date, more than 114,200 people were hospitalized with the disease, according to the Covid Tracking Project.

COVID-19 cases have totaled 17,375,760 and led to 303,849 deaths in the United States, along with 75,433,871 cases and 1,670,818 deaths worldwide, as of Dec. 18, according to Johns Hopkins University. America has the dubious distinction of incurring the most cases and deaths of any nation.

The dividend-paying cleaning stocks to buy now largely feature companies that offer more than just hygiene protection for their customers. Investors seeking to tap into the COVID-19 cleaning movement have several dividend-paying stocks worth considering for purchase.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is great as a holiday gift and is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.

 

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