The Clorox Company (NYSE: CLX) manufactures and markets consumer staples worldwide. It operates through four segments:
- Health and Wellness offers cleaning and disinfecting products, professional food service products, and vitamins, minerals and supplements
- Household provides cat litter, bags and wraps, and grilling products
- Lifestyle offers dressings, dips, seasonings, and sauces, natural personal care products, and water-filtration systems
- The International segment sells the same product offering as the other three segments to markets outside the U.S.
Clorox’s revenues are somewhat diversified across its four segments, led by Health and Wellness. Geographically only 15% of sales come from outside the U.S.
| Segment | 2020 Revenue (in billion USD) | Revenue % |
| Health and Wellness | 2.749 | 41% |
| Household | 1.795 | 27% |
| Lifestyle | 1.154 | 17% |
| International | 1.023 | 15% |
CLX’s Dividend History and Payout Ratio
CLX has an excellent track record of paying and increasing dividends for 43 consecutive years, a record that the company will feel highly obligated to maintain. In 2020, CLX paid out only 45% of its profits in the form of dividends. This low payout ratio enables the company to keep growing its dividend in the future, even if earnings are not growing or temporarily declining. The company’s payout ratio history over the past 23 years has shown some volatility, moving between 19% and 72%.
When Does CLX Pay Dividends?
CLX pays a quarterly dividend typically announced on various dates in February, May, September, and November. The ex-dates are in the second half of April, July, October, and January, and payments are made around the middle of the following months (May, August, November, and February).
What is CLX’s Dividend Yield?
Dividend yield (the annual dividend paid divided by the share price) shows the 1-year return on a stock purchase in the form of dividends. In 2020, CLX had a dividend yield of 2.1%, slightly higher than our investment universe average of 1.8%. The stock’s historical yield has been moving between 1.2% and 3.5% with an average of 2.4%.
CLX’s Dividend Growth Rate
CLX has grown its dividend by an average of 7.5% every year for the past 10 years as well as the last five years, a growth number that’s not half bad. Below you can see the effect a 10-year growth rate of 7.5% has on CLX’s dividend assuming a starting yield of 2.1%.
| Years | Dividend Growth | Yield Calculation | Yield % |
| Year 0 | 0% | 2.10% | 2.1% |
| Year 1 | 7.50% | 2.1%*1.075 | 2.26% |
| Year 2 | 7.50% | 2.1%*(1.075)^2 | 2.43% |
| Year 3 | 7.50% | 2.1%*(1.075)^3 | 2.61% |
| Year 4 | 7.50% | 2.1%*(1.075)^4 | 2.80% |
| Year 5 | 7.50% | 2.1%*(1.075)^3 | 3.01% |
| Year 6 | 7.50% | 2.1%*(1.075)^6 | 3.24% |
| Year 7 | 7.50% | 2.1%*(1.075)^7 | 3.48% |
| Year 8 | 7.50% | 2.1%*(1.075)^8 | 3.75% |
| Year 9 | 7.50% | 2.1%*(1.075)^9 | 4.03% |
| Year 10 | 7.50% | 2.1%*(1.075)^10 | 4.33% |
If you bought CLX at a yield of 2.1%, an average 10-year dividend growth of 7.5% would mean your yield would be 4.33% 10 years from now. This is called “yield on cost,” and shows the yield you’re receiving on the original amount of money you invested.
How Strong is CLX’s Dividend?
When evaluating dividend stocks, we use our own methodology which is based on Q-scores which consist of seven factors:
- Years paying and increasing dividends
- Market cap
- International sales
- Yield
- Payout ratio
- Five-year dividend growth rate
- Ten-year dividend growth rate
We calculate each of these factors and summarize them in a final proprietary Q-score. To learn more about how we calculate Q-scores, check out our piece on “7 Factors Used to Select Dividend Growth Stocks.”
The Q-score for The Clorox Company is presently 9.9, the lowest Q-score in our 14-stock “Consumer Staples” sector. We reward CLX for its dividend growth track record and its low payout ratio. International sales are low, so it gets a penalty. The rest of the factors are fine or mediocre, so they contribute smaller amounts to the stock’s overall Q-score.
As we have many better alternatives for consumer staples stocks, Clorox is not included in our final 30-stock dividend growth portfolio.
