Updated 3/6/25
Colgate-Palmolive (NYSE: CL) is a household name that has been around for over 200 years. Known for its dominance in oral care and personal hygiene products, the company has built a strong global brand that consumers trust. With an established presence in over 200 countries, Colgate’s steady revenue stream makes it an attractive option for dividend investors looking for consistency and reliability.
The company operates in the consumer staples sector, which tends to perform well in all market conditions. People will always need toothpaste, soap, and cleaning supplies, making Colgate-Palmolive’s business model incredibly resilient. For income investors, this means a steady stream of dividend payments, even during economic downturns.
Let’s take a closer look at Colgate-Palmolive’s dividend profile and whether it continues to be a strong choice for long-term investors.
🏆 Key Dividend Metrics
💰 Dividend Yield: 2.14%
📈 5-Year Avg. Yield: 2.30%
🔄 Dividend Growth Streak: 61 years
🛡 Payout Ratio: 56.41%
🚀 5-Year Dividend CAGR: ~3%
📆 Recent Dividend Payment: $2.00 per share annually
⏳ Ex-Dividend Date: January 21, 2025
Dividend Overview
Colgate-Palmolive has earned its place among the most consistent dividend-paying companies in the market. It has raised its dividend for 61 consecutive years, securing its status as a Dividend King—an elite group of companies that have increased dividends for over 50 years.
The current dividend yield sits at 2.14%, which is slightly below its five-year average of 2.30%. This suggests that the stock price has increased relative to its dividend payouts, which is a sign of investor confidence. While not the highest yield in the market, Colgate’s consistency is what makes it appealing.
The company’s payout ratio is 56.41%, meaning it distributes a little over half of its earnings to shareholders in the form of dividends. This is a sustainable level, allowing Colgate to maintain dividend payments while reinvesting in the business for future growth.
Dividend Growth and Safety
Dividend growth for Colgate has been steady but not aggressive. Over the past five years, the company has increased its dividend at an average rate of around 3% per year. While this isn’t rapid growth, it does provide investors with reliable, inflation-beating income.
A key reason for this slow but steady growth is Colgate’s strong cash flow. The company generates over $4 billion in operating cash flow annually, with nearly $3.4 billion in free cash flow after expenses. This ensures that dividends are well-covered and unlikely to be cut, even in challenging times.
For investors who value income stability over high-yield opportunities, Colgate’s dividend profile remains solid. It may not be a stock that delivers explosive returns, but it’s one that investors can count on for regular income.
Chart Analysis
Price Action
The stock has been in a recovery phase after a noticeable downtrend that started in the latter part of last year. After peaking above 110, it experienced a steady decline, breaking below its 50-day moving average and eventually dipping under the 200-day moving average as well. The price found support near the mid-80s and has since started to climb back.
In recent weeks, there has been a shift in momentum. The price has been making higher lows, indicating growing bullish sentiment. It is now hovering around 93.29, slightly above the 50-day moving average but still below the 200-day moving average, which could act as resistance.
Moving Averages
The 50-day moving average (orange line) has been trending downward since late last year, reflecting the prior bearish momentum. However, the price has recently crossed above this moving average, a potential signal that buyers are regaining control. The 200-day moving average (blue line) remains flat to slightly declining, meaning the longer-term trend is still in question.
For a true trend reversal, the price would need to break and hold above the 200-day moving average. Right now, it’s at a decision point where buyers and sellers will battle for control.
Volume Analysis
Volume has remained relatively stable, with occasional spikes on certain trading days. Notably, there were higher-than-average volume days during the selloff, showing strong selling pressure. More recently, there have been volume surges on green days, indicating that some institutional buyers may be stepping in.
A volume breakout above the 200-day moving average would add conviction to the recovery, but without that, this could still be a temporary bounce rather than a sustained rally.
RSI and Momentum
The Relative Strength Index (RSI) at the bottom of the chart has been climbing after hitting oversold levels a few months ago. It’s now approaching a neutral-to-bullish range, suggesting the stock is no longer in deep oversold territory but is not yet overbought either.
If RSI continues upward and moves above 70, it could indicate overextension and a potential pullback. However, if it stabilizes in the 50-60 range, it would confirm ongoing strength in the recovery.
Recent Candlestick Patterns
Looking at the last five trading sessions, the price action shows a mix of bullish and cautious sentiment. The presence of lower wicks in recent candles suggests buyers have stepped in on dips, preventing a deeper pullback. However, upper wicks on a couple of days indicate sellers are still active, particularly near resistance levels.
If the stock can maintain its upward trajectory with strong closes near daily highs, it would be a sign that buying pressure is overwhelming any remaining selling interest. On the other hand, if it starts forming longer upper wicks with weak closes, that would suggest exhaustion among buyers.
Analyst Ratings
Colgate-Palmolive (NYSE: CL) has recently experienced a mix of analyst upgrades and downgrades, reflecting diverse perspectives on its future performance.
Upgrades 📈
Several analysts have expressed optimism about Colgate-Palmolive’s prospects. For instance, Argus adjusted its price target to $104, maintaining a “buy” rating. Similarly, UBS revised its target to $100, upholding a “buy” recommendation. These upgrades are often attributed to the company’s strong market position and consistent financial performance. Analysts highlight Colgate’s robust brand recognition and its ability to maintain steady revenue streams, even in challenging economic climates. The firm’s strategic focus on emerging markets and product innovation also contributes to a favorable outlook.
Downgrades 📉
Conversely, some analysts have adopted a more cautious stance. Barclays, for example, reduced its price target from $96 to $83, assigning an “equal weight” rating. Stifel Nicolaus also lowered its target to $93, maintaining a “hold” position. These downgrades often stem from concerns about potential market saturation and competitive pressures. Analysts point to challenges such as increasing competition from both established brands and private-label products, which could impact Colgate’s market share. Additionally, fluctuations in foreign exchange rates and rising raw material costs are factors that might pressure profit margins.
Consensus Price Target 🎯
The consensus among 23 analysts sets the average 12-month price target for Colgate-Palmolive at approximately $97.14. This reflects a balanced perspective, acknowledging both the company’s strengths and the challenges it faces in the current market environment.
Earning Report Summary
Colgate-Palmolive just released its latest earnings report, and it’s a mix of steady performance and some challenges ahead. The company wrapped up the fourth quarter with $4.94 billion in net sales, which is pretty much in line with the previous year. While sales didn’t show much growth, profits held up well, with net income coming in at $739 million, slightly better than last year. Adjusted earnings per share landed at $0.91, edging past analyst expectations.
A Big Milestone for the Full Year
For the full year, Colgate crossed the $20 billion mark in net sales for the first time ever—a big achievement. Operating income came in at $4.27 billion, and net income totaled $2.89 billion, showing that despite some hurdles, the company is still making solid profits.
How Different Regions Performed
Colgate’s sales story varied depending on the region:
- Latin America struggled with a 7.2 percent decline, mainly due to currency fluctuations and economic issues in key markets like Brazil and Argentina.
- North America dipped slightly, down 1 percent, as higher prices led to weaker demand.
- Europe, Asia-Pacific, and Africa/Eurasia showed some growth, proving that Colgate is still finding ways to expand globally.
- Hill’s Pet Nutrition business held up well, with sales climbing 2.3 percent, showing continued demand for premium pet food.
Challenges and How Colgate is Responding
There were a couple of hurdles this quarter. Foreign exchange headwinds took a bite out of revenue, especially in Latin America, and repeated price hikes seem to have cooled off consumer demand in certain markets. To keep its competitive edge, Colgate has been focusing on product innovation and marketing. Another big move: the company is planning to exit the private-label pet food business in 2025 to focus on more profitable areas.
What’s Next for 2025?
Looking ahead, Colgate isn’t expecting big sales growth next year. The company projects flat net sales, mainly due to currency pressures and its decision to phase out lower-margin businesses. However, organic growth is still expected to come in around 3 to 5 percent, in line with its long-term targets.
Market Reaction
Investors weren’t thrilled with the cautious outlook. The stock dropped about 5 percent following the earnings report, likely due to concerns over weaker sales projections and ongoing currency challenges. But with its strong global brand and continued investments in innovation, Colgate is still in a solid position for long-term growth.
Financial Health and Stability
Colgate-Palmolive has a strong business model, but there are a few financial metrics worth keeping an eye on.
The company’s profitability remains healthy, with a 14.37% net margin and a 20.93% operating margin. These numbers indicate that Colgate is efficient in generating profit from its revenue, a key trait for long-term sustainability.
One area of concern is the company’s debt. Colgate has a total debt of $8.51 billion and a debt-to-equity ratio of 1,564.71%. This level of leverage is high, meaning the company relies heavily on borrowed funds. While this hasn’t been a major issue due to Colgate’s strong cash generation, it’s something investors should monitor.
The company’s current ratio of 0.92 suggests that short-term liquidity is tight. While Colgate has historically managed its financial obligations well, this number indicates that it doesn’t have a large cash cushion for unexpected expenses.
Valuation and Stock Performance
Colgate-Palmolive is a high-quality stock, but it isn’t cheap. Investors tend to pay a premium for reliable, defensive companies like Colgate, which is reflected in its valuation.
The stock currently trades at a trailing price-to-earnings (P/E) ratio of 26.58, which is higher than the broader market average. Its forward P/E of 25.00 suggests that investors are expecting earnings growth, but the stock remains on the pricier side.
The company’s PEG ratio of 2.17 indicates that its valuation is high compared to its expected growth rate. While this isn’t necessarily a dealbreaker, it does suggest that Colgate is trading at a premium compared to its historical averages.
Over the past year, Colgate’s stock has ranged between $85.32 and $109.30. The stock has climbed nearly 36% in the past year, outpacing the S&P 500’s 12% gain. This type of performance is rare for a defensive dividend stock, showing that investors have confidence in Colgate’s long-term stability.
Risks and Considerations
While Colgate-Palmolive is a strong dividend payer, there are some risks investors should keep in mind.
⚠️ Slower Dividend Growth – The company has a long history of increasing dividends, but its growth rate is modest. Investors seeking high-yield or fast-growing dividends may need to look elsewhere.
⚠️ High Debt Levels – With a debt-to-equity ratio over 1,500%, Colgate has a significant amount of leverage. While its cash flow supports this debt load, high leverage always carries some level of risk.
⚠️ Expensive Valuation – The stock trades at a premium, with a high P/E ratio and PEG ratio. Investors looking to buy may want to wait for a pullback.
⚠️ Competition and Cost Pressures – While Colgate has a dominant market share in oral care, it faces competition from large players like Procter & Gamble and Unilever. Rising raw material costs could also impact profit margins over time.
Final Thoughts
Colgate-Palmolive is one of the most dependable dividend stocks on the market. It’s not a high-yield play, nor is it a fast-growing stock, but it delivers what long-term investors want—steady and reliable income.
The company’s strong brand recognition, global market presence, and stable cash flow make it a great choice for conservative investors looking for consistent dividends. While valuation is on the higher side, Colgate’s track record of performance justifies the premium.
For those seeking a stock that can be held for decades without worry, Colgate-Palmolive remains a strong contender. It won’t make you rich overnight, but it will continue to pay dividends year after year, which is exactly what many income investors are looking for.
Recent Comments