Investors Should Watch Clorox Stock (CLX) Amid Dividend News

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Jun. 7 2021, Published 10:59 a.m. ET

While the early COVID-19 pandemic squandered some stocks, it uplifted others. Clorox (NYSE:CLX) stock falls into the latter category. Now, the company made an announcement about its dividend to share some of the profits from the virus-cleaning product revenue.

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Should the latest Clorox news impact your decision to invest in CLX?

Clorox (CLX) increases its stock dividend

clorox dividend increase
Source: Clorox Facebook

The Clorox board of directors announced on June 2 that they're declaring a five percent boost in the quarterly dividend EPS. This takes the earnings from $1.11 per share to $1.16 per share based on the stock's market value at the time of the announcement. 

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Shareholders will receive the next dividend on Aug. 13. Investors must acquire their CLX shares by the market close on July 28 in order to receive the dividend.

The new dividend for Clorox (CLX) stock is strong.

Currently, Clorox maintains a 2.59 percent dividend yield after the five percent increase, which makes it a strong contender for the passive income space. CLX shares have seen increased earnings over the last few years, partially due to an increase in market capitalization.

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What Clorox (CLX) stock's valuation looks like

Analysts agree that Clorox stock is slightly undervalued. The shares are down 10.8 percent YTD, with a similar regression over the last year. This comes after a 55 percent rally in the first seven months of 2020.

Clorox (CLX) stock forecast

Clorox shares are expected to increase enough over the next 12 months to provide a 3.5 percent expansion in the EPS. The median analyst prediction sits at 6.8 percent in the green, although the forecast hits as much as 34.2 percent. Even returns that are in line with the market average will likely reap rewards over the long term thanks to the strengthened dividend.

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What Reddit users have to say about Clorox (CLX) stock

Clorox stock jumped up more than 12 percent during the WallStreetBets rallies of late January, but the interest didn't last long. The demand for Clorox products is down to its March 2020 lows as U.S. residents get vaccinated by the masses and COVID-19 pandemic fears for many start to wane.

Should you buy Clorox (CLX) stock?

Given the fact that CLX shares have entered a correction period over the last year, it's plausible that Clorox board members are seeking a way to reignite shareholder interest. The stock's long-term forecast is strong, but investors might encounter another swing correction before gains return.

Wait until Clorox's (CLX) stock price is down 10 percent before buying

The earnings results for Clorox Co. during the third quarter weren't as strong as investors were hoping, which has contributed to sell-offs for the stock. It was hard to compete with the demand during 2020. The company will likely experience some rebalancing over the next quarter or two. As a result, you might want to wait for another correction (defined as a drop of at least 10 percent) before executing a position in Clorox stock.

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