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Colgate-Palmolive Raises Dividend After a Successful Turnaround

Colgate-Palmolive Company (CL) is a leading provider of personal care and pet nutrition products. The company’s oral care and personal care products are leaders in their respective categories.

The company generated 82% of its sales from oral, personal, and home care products and 18% of its revenue from pet nutrition in 2020. In terms of geographic diversification, the company generated approximately 70% of its net sales from markets outside of the U.S. with 45% coming from emerging markets. In terms of customer concentration, Wal-Mart Inc. represented about 12% of its net sales, but no other customer represented more than 10% of net sales last year.

A Successful Turnaround

Colgate-Palmolive embarked on a turnaround following the appointment of a new CEO in April 2019. Since then, the company’s business has returned to sustained organic sales growth of at least the mid-single digits. Meanwhile, the pandemic has also improved the outlook for its personal hygiene and cleaning portfolio as well as its pet nutrition business.

In FY 2021, the company expects net sales to increase by 4% to 7% when including a low-single digit benefit from foreign exchange. Organic sales are expected to fall within its long-term target range of 3% to 5%. On a non-GAAP basis, management expects gross margin expansion, increased advertising investment, and mid- to high-single digital EPS growth.

The company raised its quarterly dividend by 2.3% to $0.45 per share, which represents a 2.25% forward yield. The dividend is payable on May 14, 2021 to shareholders on record as of April 21, 2021.

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