Colgate Boosts Investors' Confidence - Analyst Blog
11 Marzo 2013 - 3:10PM
Zacks
Driven by strong positive outlook,
the global consumer products manufacturer,
Colgate-Palmolive Company (CL) is going for a
two-for-one stock split of its common shares. Also, the company has
increased its quarterly cash dividend effective from the second
quarter of fiscal 2013.
The company will distribute the
additional shares relating to the split on May 15 this year to the
shareholders of record date as of Apr 23, 2013. This will bring
Colgate’s total shares outstanding to 936 million from the current
level of 468 million of a par value of $1.00 per share. Though
splitting shares has no real impact on the company’s performances
or share prices, but it makes the shares affordable to small
investors.
Concurrently, Colgate announced its
decision to raise the quarterly dividend by 6 cents on a pre-split
basis to 68 cents per share. This translates into a 10% hike from
the prior dividend. The increased dividend will be paid on May 15,
2013 to stockholders of record as of Apr 23. Prior to this
announcement, this Zacks Rank #3 (Hold) stock had been paying a
quarterly dividend of 62 cents per share.
The strength of Colgate’s business
model is reflected in its strong cash generation capabilities and
its commitment to return value to the shareholders. We believe that
continued dividend hikes will increase investors’ confidence.
Colgate’s strong balance sheet and
cash flows provide financial flexibility to the company for taking
shareholder-friendly moves, R&D investments and global business
expansions. During fiscal 2012, it shelled out $1,277 million on
cash dividends. Cash and cash equivalents stood at $884 million at
the end of the fiscal, while Colgate generated $3,196 million of
cash from operational activities. We remain encouraged by Colgate’s
strong cash position and its ability to service long-term
debts.
Other companies that recently
increased dividend include Nordstrom Inc. (JWN),
by 11% to 30 cents, The Coca-Cola Company (KO) by
10% to 28 cents, and GameStop Corporation (GME) by
10% to 27.5 cents.
We believe that dividend hikes not
only enhance shareholder’s return, but raise the market value of
the stock. Through dividend raises, companies persuade investors to
either buy or hold the scrip instead of selling these. Looking
ahead, Colgate remains confident of its growth potential,
suggesting enhanced value for shareholders via dividend payout as
well as share buybacks.
COLGATE PALMOLI (CL): Free Stock Analysis Report
GAMESTOP CORP (GME): Free Stock Analysis Report
NORDSTROM INC (JWN): Free Stock Analysis Report
COCA COLA CO (KO): Free Stock Analysis Report
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