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Why Income Investors Should Expect A Dividend Raise Soon From This Dividend King

Sure Dividend profile picture
Sure Dividend


  • Colgate-Palmolive has increased its dividend for 55 years in a row. It is scheduled to raise its dividend in the next few days.
  • Earnings growth has been light in recent quarters, due to higher raw materials costs. Fortunately, volume growth, price increases, and productivity gains are expected to offset rising cost inflation.
  • Investors can reasonably expect a low-to-mid single digit raise for Colgate-Palmolive in 2018.

By Bob Ciura

Colgate-Palmolive (NYSE:CL) has a long history of rewarding shareholders with dividends. It has paid uninterrupted dividends since 1895, and it has increased its dividend payments for the past 55 consecutive years. It is a member of the Dividend Aristocrats, a group of 53 companies in the S&P 500 Index, with 25+ consecutive years of dividend increases. You can see all 53 Dividend Aristocrats here.

Not only is Colgate-Palmolive a Dividend Aristocrat. It is also a Dividend King, an even smaller group of companies with 50+ consecutive years of dividend increases. You can see all the Dividend Kings here.

There are just 23 Dividend Kings, including Colgate-Palmolive. The company has paid a flat dividend for four quarters in a row. It is scheduled to declare its next quarterly dividend soon, which means it is time for another dividend increase.

Colgate-Palmolive’s growth has slowed in recent quarters, which could limit the size of its dividend increase. But as a Dividend King, it is still highly likely another raise is in store for investors.

Business Overview

Colgate-Palmolive traces its roots all the way back to 1806. Today, the company manufactures oral care products like toothpaste, personal care products such as soap, home cleaning products, and pet food. Colgate-Palmolive is a global giant. It sells its products in over 200 countries and territories around the world, and the company generates $15 billion in annual sales. Its major brands include Colgate, Palmolive, Hill's Science Diet, and more.

Source: 2018 CAGNY Presentation, page 4

On January 26th, Colgate-Palmolive released its fourth-quarter earnings report. It was a challenging quarter for the company, as revenue missed analyst expectations by $40 million, while earnings-per-share was just in-line. Organic sales, which excludes non-recurring factors like currency exchange, rose 2% for the fourth quarter. This

Investors looking for high-quality dividend growth stocks should consider the Dividend Aristocrats like Colgate-Palmolive. The Dividend Aristocrats have significantly outperformed the S&P 500 Index in the last 10 years. Their outperformance is likely to continue moving forward, as the Dividend Aristocrats have strong brands and durable competitive advantages. This is why we created our service Undervalued Aristocrats, which provides actionable buy and sell recommendations on some of the most undervalued dividend growth stocks around. Click here to learn more.

This article was written by

Sure Dividend profile picture
Sure Dividend helps individual investors find high quality dividend growth stocks with strong competitive advantages suitable for long-term holding. The authors who write for Sure Dividend on Seeking Alpha are as follows:Bob CiuraBen ReynoldsJosh Arnold

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (23)

jimklawyer profile picture
For those considering CL as a long-term investment I would suggest an analysis based on the potential drawdown, in other words how far might CL fall if the "phat were to hit the shin".

For an example, in lat August of 2016 to early 2017 CL fell from the mid-$70s to lows in the $63-$64 range in late January of 2017. So, about a 16% loss. Anyone who can't stand to lose 16% even in a relatively low volatility stock like CL shouldn't be investing in equities.

In mid-July of '14 to October of the same year, there was roughly an 11% pullback. In March of '93 through August of '93, there was a real decline in CL.

Maybe there will be another real bear market, as opposed to just these minor low double digit declines which we've been experiencing over the last 8 to 9 years. But, everyone's risk tolerance is different, and not to pick sides, but I turned off div. reinvesting for most of my taxable equity holdings, just so I won't get caught in the wash rule snare, since it was too hard to keep track of when the div was paid. That's just me; your preferences may be and likely are different.
4paisa profile picture
even at $71 price div yield is more like 2.25%. it is not an attractive entry point for dividend stock.
By_Endurance_We_Conquer profile picture
Sure Dividend aka Bob Ciura, well done!

Great analysis with the - again - usual spot on idea to where the dividend might go!

CL just declared a 5% increase!
MyStockVault profile picture
CL is a HOLD.
I am very excited for 2% raise
5ofDiamonds profile picture
Lets analyze CL (rounded metrics):

1. Stock price $69.(52 week range - 68 to 78), so towards 1 year low. Which means not much because 2017 was a crazy year. Personally, I think most stocks have lost their 1 year llow valuation, because 2017 was crazy. Also look at 5 year lows.

2. Historical charts tell me that the stock was a dud, but rose crazy in the last decade (under $5 to over $70 kimda story). The Q then becomes that for this, and all such stocks, that if the 80% of their rise has come in a short period of time after 2009, can it sustain? Believe it or not, a lot of stocks have had crazy growth in their stock price since 2014. Look at their charts.

3. Yahoo Finance says PEG ratio is 2.65 i.e. this company is not expected to grow too much in next 5 years. This is common for ALL dividend kings. They have reached a flat land. For CL, even P/E is high for whats projected for its growth. It must mean, market pays for its brand.

But I noticed that Yahoo Finance miscalculates PEG, esp. for companies which do not follow calendar year as their financial year.

4. Lets look at CL at Fidelity, for its PEG ratio. Fidelity says, that PEG ratio for CL is 3.69 (vs. Yahoo Finance's 2.65). Screw it, I got an idea. Let me look at their Earnings.

5. CL earned $2.87 for its stock price of $69 in 2017. It will earn $3.16 and then $3.43 in next 2 years, per estimates. Umm...not a good growth rate. That explains the high PEG ratio above 2. Its a good company but do not expect growth. You buy it, and you can feel stuck!

Conclusion: Not a buy.

Evil Enantiomer profile picture
Not sure this occurred to you but “Sure DIVIDEND” isn’t so much interested in the stock’s growth as much as he likes the stock’s dividend growth... which has been increasing for a while.
"5. CL earned $2.87 for its stock price of $69 in 2017. It will earn $3.16 and then $3.43 in next 2 years, per estimates. Umm...not a good growth rate."

5 - These numbers can change along with Consumer Staples sentiment.

Was somewhat disappointed in the 5% dividend increase, though.
5ofDiamonds profile picture
Oh c'mon Evil Enan,

Dont get so lost in Dividends, and Dividend growth that you overlook a simple fact as to where it is coming from?

Anyone can issue debt, and increase dividends. Hear of Payout ratio? Some dividend contenders on David Fish CCC list earn $1 and pay out $2? How so?

Do not be so "sure" of dividends.

I considered entering this stock recently but was scared off by the massive amounts of insider selling - thiughts?
MolluskOS profile picture
Tempted to increase my long standing position at the current depressed price point. Adding another 5% allocation in terms of shares held holds appeal at this weeks near 52 week low.
5ofDiamonds profile picture
Sure Dividend,

I think folks are better off going to a 20% cash position if they are not already.

geekette profile picture
Why? What is cash going to do for me that CL won't in 2018??
5ofDiamonds profile picture
Hi geekette,

Keeping 20% cash now is the ONLY BEST advise I have learnt since I started learning about markets on SA.

geekette profile picture
but, why? what about this "advice" appeals to you for your own situation?

I understand that I march to a different drummer, not ever sitting on investable cash, but why dump 1/5 of my stocks? It took decades to build out and up to the level I'm at now, I am not interested in tearing down that wall because it must indeed be built again. I have never been a "sell now to buy back cheaper later" person.

Retirement is a different ballgame, I will carry more cash outside of portfolios than I do now since paycheck is gone, plus some modest cash in portfolios to draw on, neither will ever represent 1/5 of my assets, but current conditions, sitting 7 years pre-retirement, do not indicate to me that I need to pull out. In fact, since nobody knows when anything bad or good is going to happen in the market, 20% cash was bad advice in 2010, 2011, 2012, 2013... and I don't feel that it is somehow better advice today.

I understand that some people like to have money ready "for opportunities" but the market is open more days of the year than not, which is the opportunity I take advantage of. I do like dollar cost averaging, including my bastardized version of it, because it puts me into position to capture what the market is giving when it's giving it, and ups my ante for the next div pay. I guess I am more of a compounder than an opportunist?

It seems you are seeing this advice here on SA, in which case I would caution that this is not an advice site, we are all opinionated investors mostly each doing our own thing and learning from each other. I expect that you do know that but I want to make sure. You are a poster I'd not seen around here until recently so I figure my role as an old timer is to assist you in figuring out your journey. Definitely never telling you what to do, I do not give advice, I do not suggest people do what I do. I'm keen on people finding their own style that suits their goals. Nobody cares about your money more than you do.

So please tell me what 20% cash does For You, if you are sitting 20% cash or planning on getting to that. There is no right or wrong answer, I'm simply interested in how you have internalized the info and plan to integrate it into your own portfolio management.

What are you trying to achieve and how are you planning to achieve it? And if you don't mind, how far from retirement?

I hope you don't feel that I am picking on you because that is not at all my intent. I just wonder that if you do move to 20% cash, how long do you stay that way? What If the big correction is still 5 years away?

Tell me a bit about what you're doing, what ideas have you picked up that feel right to you, etc.?
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