Colgate-Palmolive (NYSE:CL) recently announced a dividend increase of 16 cents per share or 7%. CL will now pay a annual dividend of $2.48 per share giving the stock a yield of 2.6%. While the current 2.6% yield is nice, investors can almost certainly expect more increases in CL's dividend in the future.
CL has paid uninterrupted dividends on its common stock since 1895. This historic commitment to the dividend is very impressive considering the difficult economic times the world has experienced since 1895. CL has been able to pay dividends during economic difficulties such as the great depression in the 1930's, stagflation in the 1970's, and most recently the financial crisis of 2008 for two reasons. Firstly, CL is in a business that is highly recession resistant. Consumers have not shown a willingness to give up basic hygienic needs due to a weak economy. Secondly, CL has been managed in a very conservative way which has allowed the company to pay the dividend even during the most difficult economic times.
CL has steadily raised the dividend as earnings have grown. The chart below shows CL quarterly dividend growth over the past 22 years.
CL has been able to raise the dividend because business has been good.
Comments from Senior Vice President of Investor Relations, Bina H. Thompson on CL's Q4 conference call:
On a year-to-date basis, our worldwide market shares are up in toothpaste, mouthwash, manual toothbrushes, bar soaps, body wash, shampoo, household cleaners and fabric conditioners. In addition, we are pleased that our gross margin improved sequentially from the third quarter supported by not only positive pricing, but another year of outstanding Funding the Growth results. We told you throughout the year of our renewed efforts to reduce our costs, and that focus continues and is succeeding. This is particularly important in a world of volatile raw material costs. And importantly, we increased our advertising in the quarter, absolutely and as a percent of sales, in support of new product launches around the world. So a strong finish to the year.
In the quarter, our U.S. market shares increased in 6 categories, were level in 3 and declined in only 2.
In toothbrushes, in the first quarter, we will be launching Colgate 360 Surround Sonic Power with 3x bacteria removal action to remove bacteria in 3 ways. The brush has surround bristles, wraparound cleaner and a cheek and tongue cleaner. The transparent handle and clear caps drive differentiation versus our manual toothbrushes.
Turning then, to Latin America. We're very pleased with the continued strong momentum in this part of the world with 14.5% organic sales increase. In addition to the market share increases in toothpaste, toothbrushes and mouthwash, referenced in the press release, we increased shares in shampoos and maintained our solid #2 position in deodorants of over 20%.
CL has $3.85 billion in net debt. This is relatively low compared to the $45 billion in equity value that CL has. CL's payout ratio is currently 46%.
Because business continues to be strong for CL, and the company is in solid financial shape, investors should anticipate further increases in CL's dividend in the future. The company's impressive dividend history shows no signs of ending anytime soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.