July 07, 2025 a 03:31 pm
CL: Dividend Analysis - Colgate-Palmolive Company
Colgate-Palmolive demonstrates a robust and consistent dividend profile, making it an attractive choice for dividend-focused investors. With a substantial history of dividend payments, it showcases stability and reliability. Despite the moderate growth in dividends, it maintains a reasonable payout ratio, ensuring that dividends are sustainable even in varied market conditions. This analysis reveals potential strengths and areas for scrutiny in Colgate-Palmolive's financial strategies.
📊 Overview
Colgate-Palmolive operates within the Consumer Goods sector, known for its resilience and stability. The company's dividend yield stands at 2.20%, which is competitive within the industry. The current dividend per share is 2.19 USD, and the company has an impressive history of maintaining dividends for 53 years. There has been no recent cut or suspension in dividends, indicating strong dividend continuity.
| Key Metric | Value |
|---|---|
| Sector | Consumer Goods |
| Dividend Yield | 2.20% |
| Current Dividend per Share | 2.19 USD |
| Dividend History | 53 years |
| Last Cut or Suspension | None |
🗣️ Dividend History
Colgate-Palmolive's strong dividend history makes it a reliable option for income-focused investors. Its 53-year track record of consistent payments showcases the company's ability to sustain payouts despite economic fluctuations. This history is crucial as it reflects the company's operational stability and profitability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 1.54 |
| 2024 | 1.98 |
| 2023 | 1.91 |
| 2022 | 1.86 |
| 2021 | 1.79 |
📈 Dividend Growth
Examining Colgate-Palmolive's dividend growth provides insight into its long-term commitment to rewarding shareholders. In the last three years, dividends have grown by 3.42% and by 2.98% over five years. This reflects a steady, albeit modest growth trajectory in dividends, indicative of reliable fiscal management.
| Time | Growth |
|---|---|
| 3 years | 3.42% |
| 5 years | 2.98% |
The average dividend growth is 2.98% over 5 years. This shows moderate but steady dividend growth.
⚠️ Payout Ratio
The payout ratio offers valuable insights into whether Colgate-Palmolive can sustain its dividends. Its EPS-based payout ratio is at 61.75%, paired with a Free Cash Flow-based payout ratio of 51.14%. These figures suggest a prudent distribution strategy, highlighting that the majority of earnings are retained to support future growth and mitigate risks.
| Key Figure | Ratio |
|---|---|
| EPS-based | 61.75% |
| Free Cash Flow-based | 51.14% |
The EPS payout ratio of 61.75% and FCF payout ratio of 51.14% indicate a balanced payout policy, maintaining a healthy balance between rewarding investors and preserving capital for further growth.
✅ Cashflow & Capital Efficiency
Understanding cash flow and capital allocation efficiency is crucial for evaluating a company's fiscal health. Colgate-Palmolive’s Free Cash Flow Yield and Earnings Yield point towards effective cash management and capital usage per share. With a Free Cash Flow to Operating Cash Flow ratio of 86.34%, the company demonstrates efficient cash flow management.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.77% | 4.61% | 2.82% |
| Earnings Yield | 3.89% | 3.49% | 2.71% |
| CAPEX to Operating Cash Flow | 13.86% | 18.83% | 27.23% |
| Stock-Based Compensation to Revenue | 0.67% | 0.63% | 0.70% |
| Free Cash Flow / Operating Cash Flow Ratio | 86.34% | 81.17% | 72.77% |
Colgate-Palmolive efficiently manages its cash flow, maintaining a strong return on invested capital. The stability in both cash flow and capital allocation enhances investor confidence and showcases robust operational efficiency.
📉 Balance Sheet & Leverage Analysis
A balanced leverage ratio is essential for long-term sustainability. Colgate-Palmolive’s Balance Sheet reflects a consistent Debt-to-Equity and Net Debt-to-EBITDA ratios, indicating sound financial health. These metrics are crucial for assessing the company’s capacity to manage its debt load efficiently.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 40.15% | 14.88% | 22.19% |
| Debt-to-Assets | 53.05% | 55.29% | 56.57% |
| Debt-to-Capital | 97.57% | 93.70% | 95.69% |
| Net Debt to EBITDA | 1.74 | 1.91 | 1.97 |
| Current Ratio | 0.92 | 1.11 | 1.28 |
| Quick Ratio | 0.58 | 0.71 | 0.76 |
| Financial Leverage | 75.69 | 26.92 | 39.23 |
The analysis indicates that Colgate-Palmolive manages its leverage adeptly, reflecting its financial stability and ability to meet financial obligations. Stable leverage ratios enhance confidence in the company’s ability to navigate financial exigencies.
❓ Fundamental Strength & Profitability
Core financial metrics such as ROE, ROA, and other margins provide insight into Colgate-Palmolive's profitability and operational efficiency. Strong margins illustrate competitive advantage and capacity for sustained earnings.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 13.63% | 3.78% | 4.45% |
| Return on Assets | 18.00% | 14.03% | 11.35% |
| Margins: Net | 14.37% | 11.82% | 9.93% |
| EBIT | 21.13% | 18.91% | 19.94% |
| EBITDA | 21.23% | 21.82% | 22.97% |
| Gross | 60.50% | 58.21% | 57.04% |
| R&D to Revenue | 0% | 1.76% | 1.78% |
Colgate-Palmolive exhibits a strong profitability framework, characterized by respectable return metrics and stable margins. These are indicative of effective cost management and strategic market positioning.
🌟 Price Development
🔍 Dividend Scoring System
| Criterion | Score | |
|---|---|---|
| Dividend Yield | 3 | |
| Dividend Stability | 5 | |
| Dividend Growth | 3 | |
| Payout Ratio | 4 | |
| Financial Stability | 4 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Total Score: 32/40
🏆 Rating
Colgate-Palmolive's dividend strategy reflects a high level of stability and commitment to shareholder value. The moderate growth rate, combined with a healthy payout ratio, emphasizes sustainable and predictable yields. Investors seeking a reliable and robust dividend income will find Colgate-Palmolive a commendable choice.