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Better Dividend Aristocrat: P&G Or Clorox?

P&G (PG) has a longer history of dividend growth than Clorox (CLX). That said, Clorox is no slouch when it comes to dividends. Clorox has increased its dividend each year since 1977, a streak of 40 years. P&G has increased its dividend for 61 years in a row. Both P&G and Clorox are members of the Dividend Aristocrats, a group of 51 stocks in the S&P 500 Index with 25+ years of consecutive dividend increases. You can see the entire list of 51 Dividend Aristocrats here. Not only is P&G a Dividend Aristocrat, but it is also a Dividend King, which is a stock with 50+ years of consecutive dividend increases.

Including P&G, there are just 19 Dividend Kings. To see all 19 Dividend Kings, click here. If an investor were trying to choose between the two, this article will discuss why P&G might be a more attractive dividend stock than Clorox.

Growth Potential

Both Clorox and P&G are performing well. Clorox grew sales by 4% last quarter, due to 7% growth in volumes. Earnings-per-share increased 8%. Over the first three fiscal quarters of the year, Clorox grew sales and earnings-per-share by 4%. It has a diversified product portfolio, which consists of household cleaning products, food, and cat litter, among others. Clorox benefits from a strong product portfolio. Over 80% of its U.S. products hold either the number one, or number two market share positions in their respective categories.

Source: June 2017 Investor Presentation, page 2

Clorox has exhibited strong growth rates, but P&G’s growth is more impressive. P&G generated 15% earnings growth last quarter, in constant currencies. Over the first three fiscal quarters, core earnings-per-share rose more than 10%. One of the biggest reasons for P&G’s strong earnings growth is its huge portfolio restructuring. It has sold off dozens of brands that represented low-growth categories. Some of the jettisoned brands include Duracell and a portfolio of more than 40 beauty brands. The goal of the restructuring is to slim down and become more efficient. Going forward, P&G will focus on just 65 brands, which could help it return to higher growth rates. P&G’s earnings growth should benefit from a more streamlined cost structure. P&G has realized $10 billion in cost savings, as a result of its restructuring.


Last quarter, P&G’s selling...


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