Increase in regular dividends
Colgate (CL) has been paying uninterrupted dividends on its common stock since 1895. In February 2015, Colgate hiked its quarterly dividends by 6% to $0.38 from $0.36 per share, effective from 2Q15[1. Year ending December 31, 2015]. This brings the annualized dividend to $1.52 per share, reflecting a dividend yield of ~2.2%.
Apart from paying regular dividends, the company has focused on increasing its dividend rate every year for 52 years.
Stable cash position leads to hike in dividends
Colgate has a history of paying quarterly dividends, which reflects its strong fundamentals. Dividend hikes are frequent in companies with a stable cash position and healthy cash flows. Colgate’s free cash flow to equity (or FCFE) was $3.0 billion in 2014.
Colgate’s dividend payout for the trailing 12 months came in at ~59.6%. In comparison, peers Procter & Gamble (PG), Kimberly-Clark (KMB), and Clorox (CLX) had dividend payout ratios of 61.0%, 85.3%, and 66.2%, respectively. A lower payout ratio may indicate that the company is retaining cash to finance growth opportunities.
Share repurchase programs
Colgate repurchases shares of its common stock on the open market and in private transactions to maintain its targeted capital structure and to fulfill requirements of its compensation and benefit plans.
In 2015, Colgate announced a new $5 billion share repurchase program. Colgate expects the new program to last three to four years. In the last four years, the company has repurchased 8% of its stock and currently has ~904 million shares outstanding.
The SPDR S&P Dividend ETF (SDY) provides an exposure of 0.9%[2. Updates as on July 17, 2015] to Colgate.