Colgate-Palmolive Stock Pays Out $30 Bil – Investors Take Note

In the last decade, Colgate-Palmolive (CL) stock has returned $30 Bil back to its shareholders through cold, hard cash via dividends and buybacks. Let’s look at some numbers and compare how this payout power stacks up against the market’s biggest capital-return machines.

As it turns out, CL stock has returned the 94th highest amount to shareholders in history.

Why should you care? Because dividends and share repurchases represent direct, tangible returns of capital to shareholders. They also signal management’s confidence in the company’s financial health and ability to generate sustainable cash flows. And there are more stocks like that. Here is a list of the top 10 companies ranked by total capital returned to shareholders via dividends and stock repurchases.

Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Top 10 Stocks By Total Shareholder Return

For full ranking, visit Buybacks & Dividends Ranking

What do you notice here? The total capital returned to shareholders as a % of the current market cap appears inversely proportional to growth prospects for reinvestments. Stocks like Meta (META) and Microsoft (MSFT) are growing much faster, in a more predictable way, compared to the others, but they have returned a much lower fraction of their market cap to shareholders.

That’s the flip side to high capital returns. Sure, they are attractive, but you have to ask yourself the question: Am I sacrificing growth and sound fundamentals? With that in mind, let’s look at some numbers for CL. (see Buy or Sell Colgate-Palmolive Stock for more details)

Colgate-Palmolive Fundamentals

• Revenue Growth: 0.06% LTM and 4.2% last 3-year average.
• Cash Generation: Nearly 16.9% free cash flow margin and 21.7% operating margin LTM.
• Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for CL was 0.06%.
• Valuation: Colgate-Palmolive stock trades at a P/E multiple of 21.7
• Opportunity vs S&P: Compared to S&P, you get lower valuation, lower revenue growth, and better margins

*LTM: Last Twelve Months

That’s a good overview, but evaluating a stock from an investment perspective involves much more. That is exactly what Trefis High Quality Portfolio does. It is designed to reduce stock-specific risk while giving upside exposure.

CL Historical Risk

That said, CL isn’t immune to big swings. It fell about 34% during the Dot-Com Bubble and 31% in the Global Financial Crisis. Even the smaller drops — like 24% in 2018 and 23% in the Covid sell-off — still cut deep. The Inflation Shock knocked it down nearly 18%. Solid fundamentals don’t stop sharp pullbacks when markets turn sour.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.