Updated 3/6/25

Clorox has been a household staple for decades, with products ranging from disinfecting wipes to charcoal and cat litter. It’s a company that has built trust with consumers, and for dividend investors, it has historically been a reliable source of income.

Lately, though, Clorox has faced some headwinds. Supply chain disruptions, changing consumer habits, and inflation have all impacted the company’s financials. Despite these challenges, Clorox still offers a solid dividend yield, and for income-focused investors, that’s what matters most.

Let’s take a closer look at how Clorox stacks up as a dividend stock, examining its payout, financial health, and whether the company can sustain its long track record of rewarding shareholders.

Key Dividend Metrics

📈 Dividend Yield: 3.29%
💵 Annual Dividend: $4.88 per share
🛠️ Payout Ratio: 131.88% (Very High)
📅 Next Ex-Dividend Date: April 23, 2025
📆 Next Dividend Payment Date: May 9, 2025
📊 5-Year Average Dividend Yield: 2.88%
🔄 Consecutive Dividend Increases: 47 years

Dividend Overview

Clorox has a strong reputation when it comes to dividends. The company has increased its payout every year for nearly five decades, which puts it among the elite Dividend Aristocrats. At 3.29%, the current dividend yield is higher than its five-year average, making it an appealing option for income seekers.

But there’s a potential red flag. The payout ratio, which shows how much of the company’s earnings are going toward dividends, is sitting at an alarming 131.88%. That means Clorox is paying out more in dividends than it earns in profits. While the company has a long history of prioritizing dividends, this level of payout isn’t sustainable indefinitely without earnings growth or cash flow support.

Dividend Growth and Safety

Clorox has built its reputation on being a reliable dividend payer, but the question now is whether it can keep up its impressive streak of increases.

Over the past five years, the company has steadily grown its dividend at an average rate of about 6% per year. But given the current payout ratio, future increases may slow down—or, in a worst-case scenario, stop altogether.

One of the most important factors in dividend sustainability is free cash flow. Clorox is still generating strong cash flow, with $558 million in free cash flow available after covering capital expenditures. However, that’s getting dangerously close to the amount it needs to cover its dividend obligations. If margins shrink or cash flow tightens, something may have to give.

At this point, Clorox is likely to continue paying dividends, but the days of aggressive growth may be behind it unless earnings improve.

Chart Analysis

Price Action and Trend

The stock has been in a volatile range over the past year, with noticeable shifts in momentum. Earlier in the chart, there was a strong downtrend, which later reversed into an extended rally, pushing the stock toward its recent highs above 170. However, that rally lost steam, and the stock has been sliding lower over the past few months.

Currently, the stock is trading near 148.37, slightly below its 50-day moving average (orange line), which has been trending downward. The 200-day moving average (blue line) is still rising but is showing signs of flattening. This suggests that the longer-term trend remains intact, but the shorter-term weakness is something to watch.

The stock briefly broke below the 200-day moving average before bouncing back, but the recent price action suggests it’s struggling to regain momentum. The lower highs forming in recent months indicate selling pressure, making it a key level to monitor if the stock can find a new support zone.

Moving Averages

The 50-day moving average has rolled over and is now acting as resistance. This is a shift from a few months ago when it was providing support. The fact that the price is now below this level suggests the momentum is tilting bearish in the short term.

The 200-day moving average is still holding, but barely. If the stock fails to reclaim its 50-day moving average and starts making lower lows, the next move could be a deeper test of support levels.

Volume and Market Participation

Volume has been relatively stable, but there have been spikes in trading activity on certain down days. This suggests that some larger players may be exiting positions, especially during the sharp drop in February.

The lack of significant volume on the recent recovery attempt is also something to take note of. A strong rally typically needs strong volume behind it, and so far, that hasn’t materialized.

Relative Strength Index (RSI)

The RSI at the bottom of the chart is trending downward but still hovering above oversold territory. This suggests that while the stock isn’t extremely overbought or oversold, momentum is weakening.

If RSI moves lower and approaches the 30 level, it could signal that the stock is reaching an exhaustion point in its current downtrend. However, as long as it stays in this mid-range, the stock remains in a neutral to weak momentum phase.

Recent Candlestick Action

Looking at the last five trading sessions, the price has shown hesitation around the 150 level. Each time it tries to push higher, sellers step in, which is evident by the wicks on top of the recent candles. The last session closed near the lower end of the day’s range, which isn’t a strong sign of buying pressure.

There have also been a couple of days with long lower wicks, meaning buyers are still stepping in at lower levels, preventing a full breakdown. However, without a strong push higher, this kind of price action could signal indecision before the next move.

Analyst Ratings

📈 In recent months, The Clorox Company (CLX) has experienced a mix of analyst upgrades and downgrades, reflecting varied perspectives on its performance and prospects.

🔼 On November 6, 2024, TD Cowen analyst Robert Moskow upgraded Clorox from a “Sell” to a “Hold” rating, raising the price target from $155 to $170. This shift was attributed to the company’s improved financial outlook and robust sales figures, suggesting a stabilization in its market position.

🔼 Similarly, on January 7, 2025, Wells Fargo analyst Chris Carey upgraded Clorox from “Underweight” to “Equal Weight,” with a price target increase from $155 to $157. This adjustment was based on Clorox’s consistent performance and resilience in a competitive market.

🔽 Conversely, on February 5, 2025, Barclays analyst Lauren Lieberman maintained an “Underweight” rating but raised the price target from $130 to $140. This cautious stance stemmed from concerns about Clorox’s profit margins and potential market share challenges.

🔽 DA Davidson analyst Linda Bolton Weiser, on February 5, 2025, maintained a “Neutral” rating and slightly reduced the price target from $171 to $169. This adjustment reflected a balanced view, acknowledging both the company’s strengths and the competitive pressures it faces.

📊 As of March 3, 2025, the consensus among 14 analysts is a “Hold” rating for Clorox, with an average 12-month price target of approximately $159.62, ranging from a low of $130 to a high of $187.

These diverse analyst opinions highlight the dynamic nature of Clorox’s market position and the varying factors influencing its stock performance.

Earnings Report Summary

Clorox just dropped its latest earnings report, and there’s a mix of good and bad news. The company reported earnings per share (EPS) of $1.55, which was actually better than what analysts expected at $1.39. But if you compare it to the same quarter last year, when EPS was $2.16, it’s clear profits have taken a hit. The main reason? Lower sales, though Clorox did manage to cut costs to soften the blow.

Total sales came in at $1.69 billion, which is about 15% lower than the same period last year. A big part of that drop was expected—last year’s numbers were inflated due to retailers restocking inventory after the August 2023 cyberattack. Plus, Clorox has been slimming down its portfolio, selling off its Vitamins, Minerals, and Supplements (VMS) business and exiting Argentina. If you take those things out of the equation, the organic sales decline was closer to 9%.

One bright spot? Margins are holding up. Clorox reported a gross margin of 43.8%, which is actually a slight improvement from last year. That makes nine straight quarters of margin growth, thanks to smart cost-cutting and the decision to exit some less profitable areas.

Operating expenses stayed pretty much in check, and the company is doing a solid job managing costs. Even though sales took a hit, Clorox has been focused on keeping its operations efficient, which helped keep profits from falling even further.

Financially, the company is in a stable position. It isn’t overloaded with debt and has enough cash flow to cover its obligations while still being able to invest in its long-term plans.

Looking ahead, Clorox adjusted its outlook for the rest of the fiscal year. It’s expecting a slight dip in sales, mostly for the same reasons that impacted this quarter. But with ongoing cost-cutting measures and a focus on keeping margins strong, the company isn’t in panic mode.

Despite the challenges, Clorox is sticking to its strategy—focusing on product innovation and keeping its brands strong. The company knows it’s dealing with a tough market, but it’s betting that smart financial management and a long-term approach will keep it in a good position moving forward.

 

Financial Health and Stability

Clorox’s financial health is a bit of a mixed bag. While the company is still profitable, its balance sheet is showing signs of strain.

One of the biggest concerns is debt. Clorox has $3.09 billion in total debt, and its debt-to-equity ratio has skyrocketed to over 2,500%. That’s an extremely high number and signals that the company is heavily reliant on borrowing.

Liquidity is another issue. The current ratio, which measures short-term assets versus short-term liabilities, is just 0.94. A ratio below 1 means Clorox doesn’t have enough immediate assets to cover its short-term obligations.

The good news is that Clorox is still generating solid operating cash flow, with $923 million in the last 12 months. That’s helping to keep things afloat, but with high debt and a stretched payout ratio, financial flexibility is limited.

Valuation and Stock Performance

Clorox stock is currently trading at $148.37, which is closer to its 52-week low of $127.60 than its high of $171.37. That suggests that investors have been cautious about the company’s future growth prospects.

From a valuation standpoint, Clorox isn’t cheap. Its trailing price-to-earnings ratio sits at 40.43, which is quite high compared to many other consumer staples stocks. However, if you look at its forward P/E of 20.08, it suggests that earnings are expected to improve, which could make the stock look more reasonably priced.

One bright spot is the PEG ratio, which is just 0.63. This metric compares valuation to expected earnings growth, and a number below 1 typically signals that a stock may be undervalued relative to its growth potential. That said, the key question is whether Clorox can actually hit those growth expectations.

Risks and Considerations

1. Dividend Sustainability – With a payout ratio above 130%, the company is stretching its ability to maintain dividend growth without a significant earnings rebound.
2. Debt Burden – A high debt-to-equity ratio limits flexibility and could force Clorox to prioritize debt repayment over dividend increases.
3. Revenue Challenges – Sales have been under pressure, declining 15.3% year over year in the most recent quarter.
4. Post-Pandemic Demand Shifts – The boom in demand for cleaning products during the pandemic has faded, creating a tough comparison for revenue growth.
5. Inflation and Rising Costs – Higher costs for raw materials and transportation are squeezing margins.

Final Thoughts

Clorox has long been a favorite among dividend investors, and its long streak of annual payout increases is impressive. The company is still committed to rewarding shareholders, and with a 3.29% dividend yield, it remains an attractive option for income-focused portfolios.

But there are real concerns. The payout ratio is unsustainably high, debt levels are concerning, and revenue growth is under pressure. If earnings don’t rebound, future dividend increases could slow or stop altogether.

For now, Clorox remains a strong name in the dividend world, but it’s facing challenges that investors should keep a close eye on. Stability in earnings and better cash flow management will be key to determining whether Clorox can continue delivering reliable income for shareholders in the years ahead.