The 2100 per cent Dividend Stock: Is It in Your Portfolio?
Colgate's background, the importance of dividends, its historical dividend performance, and the factors influencing the company's dividend decision.
Company Overview
Colgate, a global consumer goods company established in 1806, is a leader in oral hygiene, personal care, and household products. Known for toothpaste and toothbrushes, Colgate also offers a diverse range, including soaps, detergents, and pet care items, and operates in over 200 countries.
dividends and Their Importance
Dividends are a portion of a company's earnings distributed to shareholders regularly. They offer investors a tangible way to benefit from their investments, representing a share of the company's profits. Dividends provide a steady income stream, making them attractive to those seeking reliable returns.
Financials
|
QoQ Performance (Rs. Crore)
|
| |
Sep-22
|
Dec-22
|
Mar-23
|
Jun-23
|
Sep-23
|
|
Sales
|
1,387
|
1,291
|
1,351
|
1,324
|
1,471
|
|
YOY Sales Growth %
|
2.59%
|
0.87%
|
3.79%
|
10.60%
|
6.03%
|
| |
|
|
|
|
|
|
Operating Profit
|
408
|
361
|
452
|
418
|
482
|
|
OPM %
|
29%
|
28%
|
33%
|
32%
|
33%
|
| |
|
|
|
|
|
|
Net Profit
|
278
|
243
|
316
|
274
|
340
|
|
NPM %
|
20%
|
18%
|
23%
|
20%
|
23%
|
|
EPS in Rs
|
10.22
|
8.94
|
11.63
|
10.06
|
12.5
|
Payout Ratio Analysis
An essential indicator of dividend sustainability is the payout ratio, revealing the proportion of earnings allocated to shareholders as dividends. A lower ratio suggests the company retains a significant share of earnings, supporting future growth and acting as a financial safety net. As of June 30, 2023, Colgate-Palmolive's dividend payout ratio is a concerning 1.06, raising questions about the sustainability of its dividend policy.
Profitability Perspective
While the high payout ratio raises concerns, Colgate-Palmolive demonstrates strong profitability prospects. It has consistently reported positive net income over the past decade, highlighting its financial strength.
Future Growth Metrics
Growth Trajectory
Colgate-Palmolive indicates a promising growth trajectory compared to peers. Metrics like revenue per share and the 3-year revenue growth rate showcase a robust revenue model. However, the company's 3-year EPS growth rate and 5-year EBITDA growth rate are less impressive when benchmarked against global competitors.
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Conclusion
Colgate-Palmolive is renowned for its reliable dividends and increasing yields. Nevertheless, the notably high payout ratio and comparatively slower growth metrics in contrast to global competitors may pose sustainability concerns for its dividends. Investors must carefully consider these factors before choosing Colgate as an investment option.
Disclaimer: The article is for informational purposes only and not investment advice.