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Clorox (CLX) Boosts Shareholder Value With 10% Dividend Hike

Zacks Equity Research

The Clorox Company CLX is a lucrative stock when it comes to dividend payouts and hikes. Recently, the company announced a 10% hike in its quarterly cash dividend to $1.06 per share, payable Aug 16, 2019, to its shareholders of record as of Jul 31. The new dividend reflects an increase from the prior payout of 96 cents.

Notably, this consumer products company has been consistently raising dividends, marking the 42nd straight year of hike. This double-digit increase in dividend follows a 14% hike last year. Dividend hikes are expected to bolster investors’ confidence in the company’s financials and strengthen its market position.

In the first nine months of fiscal 2019, Clorox returned approximately $675 million, almost equally between dividends and share repurchases. This is impressively up nearly 75% from the figure recorded in the same period last fiscal. Moreover, the company ended the fiscal third quarter with cash and cash equivalents of $178 million and generated $603 million of net cash from continuing operations in the first nine months of the year.

Impressively, the company has been making continuous endeavors to generate strong cash flow generation and maximize shareholders’ value. Also, it remains committed to make investments in its business to aid long-term growth.

We note that Clorox remains keen on the smooth execution of its 2020 Strategy to improve categories and overall market share. In fact, the whole strategy is aimed at achieving certain long-term aspirations including net sales growth by 3-5%, EBIT margin expansion by 25-50 basis points (bps) and free cash flow of 10-12% of sales, all on a yearly basis. Clorox is well on track with its 2020 Strategy, which is meant to be achieved through key accelerators like investment in brands; development of e-commerce; technological advancements; enhancement of growth culture and focus on the 3Ds - desire, decision and delight.

Moreover, the company remains keen on making strategic partnerships with retail customers and evolving capabilities in both physical world and online. As a result, Clorox witnessed an improvement in digital capabilities, leading to a solid e-commerce growth, which is now a significant revenue contributor. Currently, the company is ahead of its plan to achieve $500 million from e-commerce sales by 2020.



Price Performance

In a year, shares of this Zacks Rank #3 (Hold) company have gained 24% compared with the industry’s 26.4% rally.

3 Better-Ranked Consumer Staples Stocks

Medifast, Inc. MED delivered average positive earnings surprise of 9.1% in the trailing four quarters. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Unilever PLC UL has a long-term earnings growth rate of 6.4% and a Zacks Rank #2.

Church & Dwight Co., Inc. CHD, also a Zacks Rank #2, has a long-term earnings growth rate of 8. 6%.

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