We got two great news items this week from Clorox (CLX). The consumer products company affirmed its outlook for the 2010 fiscal year. Clorox sees earnings-per-share coming in between $4 and $4.15.
I always like to see my favorite stocks affirm their earnings estimates. This is especially the case when so many companies have been lowering their forecasts or simply not giving forecasts.
The other news is that Clorox is raising its quarterly dividend by 9% to 50 cents a share. This brings the current yield up to 3.7%, which is just a bit below what investors can get from a 10-year Treasury bond. I should add that the dividend increase isn’t much of a surprise, since Clorox has now raised its dividend for 32 straight years. That’s a streak I like a lot.
This dividend increase is a shrewd move from Clorox. When the market gets jittery, investors crave dividends. Plus, dividends haven’t been popular with corporate America this year. Standard & Poor’s recently projected that dividend payouts will fall by 13.3% this year. That’s the biggest drop-off in dividends since 1942. So when you raise your dividend during a rough environment, investors take notice.
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By the way, Clorox makes a lot more than Clorox. The company runs several business lines from Glad trash bags to Hidden Valley salad dressing and even Kingsford charcoal. Clorox has even expanded in to the natural market, with its acquisition of Burt’s Bees natural products company and a new line of green cleaning products.
So far this is shaping up to be a good year for CLX. On May 1, the company reported first-quarter earnings of $1.08 a share. That beat Wall Street’s estimates by an amazing 20%.
Clorox is a solid company going for a good price, not to mention the decent sized dividend yield. I currently rate shares of Clorox a buy.
At the time of publication, Louis Navellier had no holdings in Clorox.
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