Last update on 2024-06-27

Clorox (CLX) - Dividend Analysis (Final Score: 6/8)

Analyze the performance and stability of Clorox (CLX) dividend policy with a final score of 6/8. Discover the key dividend metrics and trends.

Short Analysis - Dividend Score: 6

We're running Clorox (CLX) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Clorox (CLX) scored 6 out of 8 based on a dividend policy performance and stability assessment. The company's current dividend yield of 3.3382% surpasses the industry average of 1.82%, making it attractive. Its average annual dividend growth rate over the last 20 years is 8.68%, which is above the 5% benchmark. However, Clorox has an average payout ratio of 74.5%, which exceeds the preferred threshold of 65%, indicating potential sustainability issues. Despite fluctuating earnings per share (EPS), Clorox has shown exceptional dividend stability over the past 20 years, consistently increasing dividend per share from $0.98 in 2003 to $4.76 in 2023. It has been paying and increasing dividends for over 25 years and has a reliable trend of stock repurchases.

Insights for Value Investors Seeking Stable Income

Given Clorox's strong dividend yield, consistent dividend growth, and long history of paying dividends, it appears to be a solid option for dividend-focused investors. However, potential investors should keep an eye on the high payout ratio and recent volatility in earnings, which could affect future dividend sustainability. Overall, Clorox is worth considering for those seeking stable dividend income, but caution is advised regarding its payout ratio and earnings volatility.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield measures the annual dividends paid by a company as a percentage of its stock price. It's a crucial metric for assessing the income generated from an investment, especially for income-focused investors.

Clorox's current dividend yield of 3.3382% significantly surpasses the industry average of 1.82%. Historically, it's evident that Clorox consistently offers a higher dividend yield compared to the industry average. Specifically, during market downturns like 2008, Clorox's yield peaked at 3.0958%, providing stability for investors seeking yield. This trend suggests robust and relatively higher returns for shareholders, making Clorox an attractive option for dividend investors. Asset growth, stable dividends during volatile times, coupled with periods of stock price appreciation (e.g., between 2009 to 2013 and 2017 to 2020), compound the attractiveness. Therefore, Clorox's high yield is a favorable indicator for potential investors.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate over a given period measures how much a company's dividend payments have increased. A consistent growth rate above 5% indicates strong financial health and shareholder commitment.

Based on the provided Dividend Ratio data, Clorox's average dividend growth rate over the last 20 years is approximately 8.68%. This positive growth trend demonstrates that Clorox has consistently increased its dividends, suggesting a robust financial position and a commitment to returning value to its shareholders. However, it's important to note that the growth rate has fluctuated significantly, as seen by the peaks and troughs in certain years."

Average annual Payout Ratio lower than 65% in the last 20 years?

average payout ratio

Based on the provided payout ratios, Clorox (CLX) has an average payout ratio of approximately 74.5% over the last 20 years. While a payout ratio below 65% is generally considered healthy as it suggests a company is paying out a sustainable portion of earnings as dividends, Clorox exceeds this threshold with an average of 74.5%. This higher ratio implies that Clorox may be utilizing a substantial portion of its earnings for dividends, which might raise concerns over its ability to sustain these payments, especially in years with lower or negative earnings. This trend can be risky, particularly when significant spikes are observed, such as the ratio reaching 394.8% in 2023, which could indicate extraordinary payouts or severe drops in earnings.

Dividends Well Covered by Earnings?

Earnings per Share (EPS) refers to the portion of a company's profit allocated to each outstanding share of common stock. High and consistent EPS indicates that the company is profitable and capable of generating strong returns for investors.

Clorox's Earnings per Share (EPS) over the past two decades starts from $2.2339 in 2003, peaks at $7.4626 in 2020, and then drops significantly to $1.2056 in 2023. This demonstrates volatility in profitability, with a particularly sharp decline in recent years. The sharp decline in EPS may raise concerns about the company’s financial health and its ability to maintain or grow its dividend payouts.

Dividends Well Covered by Cash Flow?

Why Dividends Well Covered by Cash Flow is important.

Dividends being well covered by cash flow indicates a company's ability to sustain its dividend payments without jeopardizing financial health.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments over the past 20 years, with less than a 20% drop year-over-year, is crucial for income-seeking investors to ensure consistent income.

Over the past 20 years, Clorox (CLX) has demonstrated exceptional dividend stability. Starting from $0.98 in 2003, the dividend per share has consistently increased annually, reaching $4.76 in 2023. There has been no year with a more than 20% decline. This trend is very positive, as it indicates the company's commitment to returning value to shareholders through consistent dividend payments.

Dividends Paid for Over 25 Years?

Dividends paid for over 25 years assess the consistency and reliability of dividend payments. It indicates financial health and shareholder value.

Clorox (CLX) has consistently paid and increased its dividends for over 25 years. Starting from $0.68 per share in 1998 to $4.76 per share in 2023, the dividend has shown a significant upward trend. This trend underscores Clorox's stability and commitment to returning value to its shareholders, suggesting a robust and reliable financial standing—a very positive indicator for long-term investors. Such consistency in dividend growth is often seen as a beacon of confidence in the company's earning capabilities.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases refer to a company consistently buying back its shares over a period, demonstrating financial strength.

Clorox (CLX) has shown a reliable trend of stock repurchases over the past 20 years. The number of shares outstanding has generally decreased, with only minor fluctuations. Key years of repurchase activity include 2004, 2005, 2006, 2008, 2009, 2011, 2012, 2014, 2016, 2017, 2019, 2020, 2021, and 2022. The average reduction in shares of -2.7359% per year indicates a consistent effort to return value to shareholders. Overall, this trend is positive as it reflects Clorox's commitment to enhancing shareholder value.