You heard it here first: CL. After reviewing CL's 10-K, I predicted that the dividend would rise to $0.62 per quarter from $0.58. My logic was that this number gets closest to a 50% payout ratio (based on 2011 EPS), without going over. This is usually the level CL tries to maintain, providing an effective payout ratio in the mid- to upper-40% range (as forward earnings are usually higher than trailing earnings, restructurings notwithstanding).
As I expect earnings around $5.30-$5.40 in 2012, I will predict now that dividends in 2013 will be raised to $0.67 per quarter, for a full year payout of $2.68, with a possibility to skew a bit higher in the event that mangement is able to expand margins (and EPS) faster than I expect. If management is able to keep repurchasing 20mn shares (gross), then EPS will likely be higher than my anticipated range, since outstanding shares will fall by 3%.
Overall, this represents a dividend growth rate of 7-9% per year plus the 2.5% yield you are collecting. A very nice and safe 9.5% return in a low return evironment.
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