Here’s Why Clorox Is Outperforming Peers

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Part 5
Here’s Why Clorox Is Outperforming Peers PART 5 OF 6

How Clorox Is Rewarding Investors

Clorox offers healthy dividends

The Clorox Company (CLX) has a solid track record of rewarding stockholders with healthy dividends and share repurchases. In the past four years, the company returned more than $2 billion to its investors in the form of share buybacks and dividends. The company’s dividend payout ratio was 59% in fiscal 2017, which is a healthy rate. Moreover, in fiscal 2017, Clorox returned $601 million to its shareholders in the form of $189 million in share repurchases and $412 million in dividends.

How Clorox Is Rewarding Investors

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Clorox’s dividend growth trend

The Clorox Company is a dividend aristocrat, which means that the company has raised its dividends for more than 25 years consecutively. To be precise, Clorox has increased its dividend for 40 consecutive years. Meanwhile, in May 2017, the company raised its quarterly dividend by 5% to $0.84 per share.

Clorox’s healthy dividend growth rate is supported by its ability to generate strong free cash flow (operating cash flow minus capital spending). In fiscal 2017, it generated about $640 million in free cash flow.

Going forward, fiscal 2018 is projected to be yet another year where the company is expected to return significant cash to its shareholders. The company expects free cash flow to be 10%–12% of its total sales.

Dividend yield

Clorox’s dividend yield of 2.5%, based on the closing price of $135.03 on September 11, is in line with the peer group average. On the same date, Church & Dwight (CHD), Colgate-Palmolive (CL), Procter & Gamble (PG), and Kimberly-Clark (KMB) generated dividend yields of 1.5%, 2.2%, 2.9%, and 3.2%, respectively.


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