Colgate's (CL) 2.3% Dividend Hike Boosts Shareholder Value

By Zacks Investment ResearchStock MarketsMar 11, 2020 09:27PM ET

www.investing.com/analysis/colgates-cl-23-dividend-hike-boosts-shareholder-value-200515439

Colgate's (CL) 2.3% Dividend Hike Boosts Shareholder Value

By Zacks Investment Research | Mar 11, 2020 09:27PM ET

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Colgate-Palmolive Company (NYSE:CL) is among those companies that regularly make efforts to boost shareholder value through dividend payouts and hikes. Impressively, the global consumer products bellwether has been paying uninterrupted dividends since 1895, while regularly increasing dividend every year since 2001. It will now pay a quarterly cash dividend of 44 cents per share, suggesting a 2.3% hike from the prior rate of 43 cents.

Effective second-quarter 2020, the new dividend is payable on May 15, 2020 to its shareholders of record as of Apr 20. The latest dividend hike brings its annualized dividend rate to $1.76 per share versus the prior figure of $1.72. Based on the share price of $68.90 on Mar 11, Colgate currently has a dividend yield of 2.5%. Dividend hikes not only boost shareholder returns but also raise market value of the stock. Through this, companies try to win investors and persuade them to either buy or hold the scrip instead of selling it.

Encouragingly, Colgate has always followed a disciplined capital allocation strategy that focuses on making investments to develop business, while using the excess cash to enhance shareholder returns, thanks to strong cash generation ability. In 2019, the company paid out dividends of $1,614 million. At the end of 2019, the company had free cash flow before dividends of $2,798 million.

Is All Good With Colgate?

Certainly, Colgate has been making continuous efforts to retain its prominent presence in the industry. It is progressing well with product innovation and in-store implementation, which are key aspects of its growth strategies. The company’s expansion in new markets and investments in brands bode well. Its pricing strategies, strategic marketing and investments in e-commerce capabilities are aiding its performance. However, concerns related to higher SG&A expenses due to increased advertising investment and foreign currency risks cannot be ruled out.

Nevertheless, this Zacks Rank #3 (Hold) stock has gained 0.9% against the industry’s 3.6% decline in the past three months.

Stocks to Consider

Darling Ingredients Inc. (NYSE:DAR) delivered a positive earnings surprise of 29.7% in the last reported quarter. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

US Foods Holding Corp. (NYSE:USFD) presently has an expected long-term growth of 10% and a Zacks Rank #2 (Buy).

The Procter & Gamble Company (NYSE:PG) , also a Zacks Rank #2 stock, has an expected long-term earnings growth of 7.4%

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the complete list of today’s Zacks #1 Rank stocks here

Colgate-Palmolive Company (CL): Free Stock Analysis Report

Procter & Gamble Company (The) (PG): Free Stock Analysis Report

Darling Ingredients Inc. (DAR): Free Stock Analysis Report

US Foods Holding Corp. (USFD): Free Stock Analysis Report

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Zacks Investment Research

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Colgate's (CL) 2.3% Dividend Hike Boosts Shareholder Value

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