Dividend Aristocrats In Focus: Colgate-Palmolive

Up to date on March 1st, 2025 by Felix Martinez

Over time, the Dividend Aristocrats have confirmed to be among the many best-performing dividend progress shares in your complete market. Broadly talking, the Dividend Aristocrats have management positions of their respective industries, with sturdy aggressive benefits that enable them to generate long-term progress.

The Dividend Aristocrats are a bunch of 69 firms within the S&P 500 Index which have elevated their dividends for 25+ consecutive years.

You’ll be able to obtain the total spreadsheet of all 69 Dividend Aristocrats, together with a number of necessary monetary metrics comparable to price-to-earnings ratios and dividend yields, by clicking on the hyperlink beneath:

Disclaimer: Positive Dividend just isn’t affiliated with S&P World in any manner. S&P World owns and maintains The Dividend Aristocrats Index. The knowledge on this article and downloadable spreadsheet is predicated on Positive Dividend’s personal evaluation, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official knowledge from S&P World. Seek the advice of S&P World for official info.

A choose variety of Dividend Aristocrats additionally qualify as Dividend Kings, an much more unique group of fifty shares which have raised their dividends for 50+ consecutive years.

Colgate-Palmolive (CL) is a Dividend Aristocrat and King. Its lengthy historical past of dividend will increase is because of its robust manufacturers and dominant place throughout a number of product classes.

Colgate-Palmolive has paid uninterrupted dividends since 1895 and has elevated its dividend funds for the previous 63 consecutive years.

Colgate-Palmolive inventory could also be buying and selling at a premium right now, but it surely nonetheless stays a robust holding for dependable and regular dividend progress.

Enterprise Overview

Colgate-Palmolive’s roots date again to 1806, making it one of many oldest firms within the US inventory market. It was based by William Colgate, who began a starch, cleaning soap, and candle enterprise in New York Metropolis.

At present, the corporate manufactures oral care merchandise like toothpaste, private care merchandise comparable to cleaning soap, dwelling cleansing merchandise, and pet meals.

Main manufacturers embody Colgate, Palmolive, Hill’s Science Food regimen, and lots of extra. The core phase is Oral Care, which constitutes almost half of the corporate’s revenues. Colgate-Palmolive is a world large. The corporate sells its merchandise in over 200 nations and territories all over the world and generates over $20 billion in annual gross sales.

Colgate-Palmolive has a extremely diversified enterprise mannequin by way of merchandise and geographic markets. Roughly half of the corporate’s income comes from rising markets, though its reliance upon these markets for progress has waned just lately.

That is as a result of success of the corporate’s pet vitamin enterprise, because it continues to take a income share from different segments. Rising markets shall be a important progress catalyst for the corporate shifting ahead. Colgate-Palmolive has the #1 place in China, with a market share above 30%.

Nonetheless, the corporate additionally faces a number of challenges, together with world provide chain points and pronounced inflation that’s growing prices throughout the board, together with in uncooked supplies and labor. These elements may hold a lid on progress going ahead.

Progress Prospects

Colgate-Palmolive typically enjoys a world-class model portfolio and excessive revenue margins. The corporate’s pet meals merchandise, particularly, are a compelling progress catalyst within the U.S. pet meals is a progress trade.

Colgate posted fourth quarter earnings on January thirty first, 2025. The corporate reported robust 2024 outcomes, surpassing $20 billion in web gross sales for the primary time. Web gross sales grew 3.3%, with natural gross sales up 7.4%. GAAP EPS rose 27% to $3.51, and Base Enterprise EPS elevated 11% to $3.60. Working money circulation grew 10% to $4.1 billion, permitting $3.4 billion in returns to shareholders. Regardless of a slight 0.1% drop in This fall web gross sales, natural gross sales rose 4.3%, and EPS noticed modest positive aspects.

The corporate maintained its world management in oral care, with a 41.4% market share in toothpaste and 32.2% in handbook toothbrushes. Gross revenue margins improved, supported by pricing methods and price efficiencies. Promoting funding elevated to drive model power and innovation. Colgate stays assured in its potential to maintain 3%- 5% natural gross sales progress in 2025, regardless of foreign money headwinds.

For 2025, Colgate expects flat web gross sales because of overseas trade impacts however continued gross revenue margin enlargement. It plans to exit private-label pet vitamin whereas sustaining robust funding in advertising and marketing and digital initiatives. Administration stays optimistic about delivering constant EPS progress and long-term success.

Supply: Investor Presentation

We see Colgate-Palmolive producing a median of 8% annual earnings-per-share progress within the subsequent 5 years.

Aggressive Benefits & Recession Efficiency

Colgate-Palmolive has many aggressive benefits which have fueled its progress over the previous 200+ years.

First, it has constructed a dominant place in its core product classes, most notably in toothpaste, the place Colgate-Palmolive’s market share has risen steadily for a few years. At present, it instructions a better market share than the following three largest opponents mixed.

Such a excessive market share permits Colgate-Palmolive to cost increased costs for its premium merchandise and lift costs over time. Pricing energy is a important aggressive benefit for client items shares.

One other main benefit for Colgate-Palmolive is that the merchandise it sells are requirements of contemporary life. Shoppers want oral, private, and pet care merchandise no matter financial situations. Colgate-Palmolive enjoys regular demand, which supplies the corporate constant profitability, even throughout recessions.

Colgate-Palmolive’s earnings-per-share by the Nice Recession are proven beneath:

• 2007 earnings-per-share of $1.69
• 2008 earnings-per-share of $1.83 (8.3% enhance)
• 2009 earnings-per-share of $2.19 (20% enhance)
• 2010 earnings-per-share of $2.16 (1.4% decline)

Colgate-Palmolive generated constructive earnings progress in 2008 and 2009, throughout the worst years of the recession. Earnings dipped barely in 2010 however resumed rising in 2011 and thereafter.

The corporate’s robust efficiency from 2007-2010 is a credit score to its robust enterprise mannequin and highly effective manufacturers. These identical qualities helped Colgate-Palmolive stay extremely worthwhile and lift its dividend in 2020, even with the affect of the worldwide coronavirus pandemic.

Colgate-Palmolive’s dividend can also be very secure. The corporate’s projected dividend payout ratio is 54% for fiscal 2025, which means that the dividend is well-covered.

Valuation & Anticipated Returns

With expectations of about $3.70 in earnings-per-share for 2025, Colgate-Palmolive inventory has a price-to-earnings ratio of 24.6.

Our truthful worth estimate for CL inventory is a P/E a number of of 24. Subsequently, the inventory seems to be barely overvalued. A declining P/E a number of may scale back annual returns by -1.0% per 12 months over the following 5 years.

As well as, CL shares have a present dividend yield of two.2%.

Assuming the inventory maintains a reasonably secure valuation forward, together with our projected earnings progress and estimated adjusted earnings-per-share for 2025, we forecast Colgate Palmolive can produce annualized whole returns of roughly 9.2% by 2030.

Because of this, we have now assigned a maintain score to the corporate’s shares.

Closing Ideas

Colgate-Palmolive is a high-quality enterprise with a number of category-leading manufacturers. The corporate has progress potential by product innovation, its Hill’s pet meals model, and progress in rising markets.

Colgate’s dividend ought to stay well-covered, and so additional dividend hikes within the coming years ought to be comparatively simple.

With annual returns simply above 9%, we at the moment fee CL inventory a maintain.

In search of extra reliable dividend progress shares? The next Positive Dividend databases include essentially the most reliable dividend growers in our funding universe:

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