Colgate-Palmolive Co. (NYSE: CL – $68.23) increased the quarterly stock dividend by 3%, effective in the second quarter, 2016. The new rate of $0.39 per share is up from $0.38 per share and is to be paid on May 16, 2016 to shareholders of record as of April 22. On an annualized basis, the new dividend rate is $1.56 per share versus $1.52 previously, and yields 2.2% at current quotations.
Conservative investors should keep their positions. In the short-term, they will be rewarded by dividend hikes and likely continued share repurchases. Colgate-Palmolive has paid uninterrupted dividends on its stock since 1895 and provided dividend increases over the past 52 consecutive years; including a 12% annual increase over the past decade. The company has also recalled over 260 million of its shares since 1999. Over the long pull, double-digit earnings from this global oral care leader (as well positions in other household and pet care markets) may materialize well into late decade, when a restructuring program is completed. The updated program, now expected to end in December 2017, will result in the reduction of 3,300 to 3,800 positions globally. I believe the company will be able to maintain its strong market share positions through continued high investments in R&D and marketing. While near-term margin pressure may persist – as the company is having difficulty passing through inflationary cost increases to customers in South America – Colgate should ultimately benefit from rising incomes and changing lifestyles, especially in Asia and other less mature overseas markets.