The Clorox Company (NYSE:CLX) Will Pay A US$1.06 Dividend In 3 Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see The Clorox Company (NYSE:CLX) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 28th of January in order to be eligible for this dividend, which will be paid on the 14th of February.
Clorox's upcoming dividend is US$1.06 a share, following on from the last 12 months, when the company distributed a total of US$4.24 per share to shareholders. Based on the last year's worth of payments, Clorox stock has a trailing yield of around 2.7% on the current share price of $159.07. If you buy this business for its dividend, you should have an idea of whether Clorox's dividend is reliable and sustainable. As a result, readers should always check whether Clorox has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Clorox
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Clorox paid out 63% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Dividends consumed 64% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.
It's positive to see that Clorox's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Clorox earnings per share are up 7.4% per annum over the last five years. Decent historical earnings per share growth suggests Clorox has been effectively growing value for shareholders. However, it's now paying out more than half its earnings as dividends. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last ten years, Clorox has lifted its dividend by approximately 8.7% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Is Clorox worth buying for its dividend? Earnings per share have been growing modestly and Clorox paid out a bit over half of its earnings and free cash flow last year. Overall we're not hugely bearish on the stock, but there are likely better dividend investments out there.
Ever wonder what the future holds for Clorox? See what the 13 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
