Should You Pay a Premium on Colgate-Palmolive Stock for the Dividends?

Colgate-Palmolive Company CEO will present at Barclays 2022 Global Consumer Staples Conference

Colgate-Palmolive Company (NYSE:CL) is an American consumer products company that specializes in the production, distribution and provision of household, health care, personal care, and veterinary products. In mid-August, Colgate-Palmolive announced that Chairman, President, and CEO, Noel Wallace, will present on Wednesday, September 7, at the Barclays 2022 Global Consumer Staples Conference.

The security has lost 7.4% in 2022, though it’s still clinging to a slight year-over-year lead. Today, CL is testing support at the 200-day moving average, as the stock was last seen down 0.05% at $78.96. 

Options traders remain incredibly bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 50-day call/put volume ratio of 4.55, which stands above all other readings from the past year. This suggests long calls have rarely been more popular during this time period. 

Still, Colgate stock trades rich when considering the business’ relatively low growth potential. Colgate-Palmolive is expected to report just 3.1% revenue growth for both fiscal 2022 and fiscal 2023. The consumer goods company is also estimated to end fiscal 2022 with a 5.9% decline in earnings, making its valuation much less attractive at a forward price-earnings ratio of 26.25 and a price-sales ratio of 3.79. Moreover, Colgate-Palmolive’s trailing 12-month net income is down 19% since fiscal 2018, despite its trailing 12-month revenues being up 13.9% during the same period.

Colgate-Palmolive is still expected to see some improvement on the bottom line by fiscal 2023, with estimates predicting 9.6% earnings growth. In addition, the consumer goods company offers a decent dividend yield of 2.32% with a forward dividend of $1.88. CL also provide a history of consistency, having paid uninterrupted dividends on its common stock since 1895 and having increased payments to common shareholders every year for 59 years, overall making Colgate-Palmolive stock best suited for dividend investors.