Clorox Co (NYSE:CLX) Announces 14% Dividend Increase

Clorox Co

Dividend Aristocrat Continuing Its Track Record

Earnings season is not just for reporting earnings; many companies also review their dividend policies around this time of year. Clorox Co (NYSE:CLX), for instance, already reported earnings earlier this month. And now, the company has some good news for dividend investors.

Clorox issued a press release this week saying that its board of directors has declared a quarterly cash dividend of $0.96 per share. This represents a 14% increase from its previous payout of $0.84 per share. The dividend is payable on May 11, 2018 to shareholders of record as of April 25. (Source: “Clorox Increases Quarterly Dividend 14 Percent to 96 Cents Per Share From Tax Reform Benefits,” PR Newswire, February 13, 2018.)

Note that Clorox has raised its annual dividend payout every year since 1977, meaning it’s a Dividend Aristocrat—a title reserved for companies with at least 25 consecutive years of annual dividend increases. (Source: “Dividend,” Clorox Co, last accessed February 14, 2018.)

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According to management, one of the reasons behind the dividend hike was the recent passage of the Tax Cuts and Jobs Act.

“We’ve been looking forward to putting tax reform benefits to work, with an emphasis on supporting long-term business growth and rewarding our shareholders,” remarked Chairman and Chief Executive Officer Benno Dorer. “We’re very pleased to accelerate our dividend announcement, which reflects a 14 percent increase in our quarterly dividend.” (Source: PR Newswire, op cit.)

The company had a detailed discussion of tax reform benefits when it reported earnings on February 2. With President Donald Trump’s tax reform, Clorox expects its fiscal-year 2018 effective tax rate to be in the range of 23% to 24%, which is much lower than its previous estimate of 32% to 33%. (Source: “Clorox Reports Q2 Fiscal Year 2018 Results; Raises EPS Outlook for Tax Reform,” Clorox Co, February 2, 2018.)

A lower effective tax rate would directly translate to higher net profits. Clorox’s management estimated that the tax reform would allow the company to generate an additional $0.70 to $0.75 of earnings per share for full-year 2018.

Trading at around $129.00 apiece, CLX stock offers a forward yield of 2.98%.

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