Please ensure Javascript is enabled for purposes of website accessibility

Why Colgate-Palmolive Is a Top Dividend Stock

By Dan Caplinger - Apr 4, 2013 at 5:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Colgate-Palmolive is on the elite list of Dividend Aristocrats. Here's how it got there.

Investors have always been interested in stocks that pay dividends, but lately, low interest rates on bonds and other fixed-income investments have made solid dividend payers even more valuable. Among the most promising dividend stocks in the market is Colgate-Palmolive (CL 0.86%), and one big reason is that it is one of the few exclusive companies to make the list of Dividend Aristocrats. In order to become a member of this elite group, a company must have raised its dividend payouts to shareholders every single year for at least a quarter-century. Only a few dozen stocks manage to make the cut, and those that do tend to stay there for a long time.

Colgate-Palmolive is well-known for its impressive stable of consumer products. Doing business around the world, the company has delivered not only solid dividends for decades, but also the growth prospects that investors always like to see in a stock. Let's take a closer look at Colgate-Palmolive to see whether it can sustain its long streak of rewarding dividend payouts to investors.

Dividend Stats on Colgate-Palmolive



Current Quarterly Dividend Per Share


Current Yield


Number of Consecutive Years With Dividend Increases

50 years

Payout Ratio


Last Increase

April 2013*

Source: Yahoo! Finance. Last increase refers to ex-dividend date. * Declared but not yet paid.

How has Colgate-Palmolive been treating shareholders lately?
As one of the best companies in America, Colgate has come from modest roots as a soap and toothpaste maker to become a global consumer-goods powerhouse. Even given the defensive nature of the sector, Colgate's stock has performed extremely well, soaring to new all-time highs, and climbing more than 50% since early 2011.

Colgate's overall growth strategy is largely behind the successful performance of its stock, as the company has tied its success to that of international markets across the globe. With a particular emphasis on Latin America, Colgate has prospered with strong financial results. By contrast, Procter & Gamble, the giant in the sector, has had trouble keeping its growth up in light of difficulties with product innovation, and a slowdown in its international growth. That has opened the door for Colgate to take a bigger role in the industry.

Yet, companies with strong track records of raising dividends for decades have generally had to overcome challenges along the way. Like many of its consumer-products peers, Colgate has had to face rising costs for some of the materials it needs to produce its goods. In order to keep its margins up, Colgate announced layoffs last fall amounting to about 6% of its workforce around the world. Despite those pressures, Colgate-Palmolive has managed to keep its payouts strong:

CL Dividend Chart

Colgate-Palmolive Dividend data by YCharts.

One big problem that hit Colgate recently was the devaluation of the Venezuelan bolivar currency. Colgate failed to be as proactive about the potential for a devaluation as Clorox, which, even before the devaluation took place, had already estimated the impact of a drop in the value of the bolivar on its earnings per share by the time it released its earnings in early February. But Colgate did note that its growth projections were contingent on no devaluation taking place, and shortly after the devaluation occurred, Colgate quickly came out with a total impact of around $0.50 per share on 2013 earnings.

When will dividends rise again?
Colgate-Palmolive just raised its dividend by almost 10%, extending its streak of annual increases to an even half-century. Colgate has been methodical about its annual increase, so don't expect another bump up until next spring. But, given its ability to boost its payout even after an unexpected hit from the Venezuela devaluation, Colgate-Palmolive clearly has the resiliency needed to remain a Dividend Aristocrat for a long time.

Click here to add Colgate-Palmolive to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Colgate-Palmolive Company Stock Quote
Colgate-Palmolive Company
$78.16 (0.86%) $0.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.